Electronic Contract Manufacture (ECM) Sector Message Board

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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector

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To: Paul Senior who wrote (2526)	5/25/2002 3:40:22 PM
From: rich evans	Read Replies (1) of 2542

Hi Paul, the recent article about FLEX is good news for ECM but the ramp of new business may take awhile. The Flex article seems positive for the EMS companies despite a continued EXTREME slowdown in telecom. CIENA said the other day that spending is below maintenance levels and Carriers are cannabalizing systems. Ciena sees no upturn until beginning of 2003. Lucent says the same. Here is article: Lucent's Russo Sees No Market Improvement Within Six Months By Hannah Warrington Frankfurt, May 25 (Bloomberg) -- Lucent Technologies Inc. Chief Executive Officer Patricia Russo said she doesn't expect the market to improve within the next six months in an interview with the Frankfurter Allgemeine Zeitung. ``It's not clear to me or anyone else at the moment when this market will get back to growth, but there won't be a recovery within the next six months,'' she told the paper. Lucent is the biggest U.S. maker of phone equipment, and last month Russo announced plans to eliminate another 6,000 jobs from a workforce that has been cut by half in the past year. Lucent is based in Murray Hill, New Jersey. Russo aims to bring costs down so that Lucent can be profitable with quarterly revenue of $4 billion. ``We're seeing light at the end of the tunnel -- we just don't know how long the tunnel is,'' she said. Frankfurter Allgemeine Zeitung 5/25 General electronics business should improve though as book to bill for passives over 1 and semis are coming back even stronger. But IT spending according to Gartner study is flat to down this year as compared to last. I think VSH much better investment then KEM. KEM is too narrow with mostly capacitors and this is cyclical commodity. VSH with their buy of generalsemi is 60% semiconductors and 40% passives and has some interesting new products especially infrared devices to be used instead of RF(bluetooth) as a linkage for ones equipment. My conclusion is that we will are at the bottom ( without terrorism event) but that we will languish for at least another 2 quarters. At least with EMS you have more outsourcing to overcome this neverending valley. The FLEX article talked about 25 bill extra in a year. WOW. That is 20% more outsourcing in one year and spread around the top teir and a couple midtiers could bring them back to normal profits, cap utilization etc and $1 share for most. With the important IT and telecom stagnant , it is our only hope OBI-WAN-KNOBE. Rich

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