Electronic Contract Manufacture (ECM) Sector Message Board

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

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To: kolo55 who started this subject	5/3/2002 2:29:49 PM
From: rich evans	Read Replies (3) of 2542

This is my periodic keep the board alive post which does not seem to be working. This downturn is more then a demand thing IMO. Demand has substantially stabalized but at levels far down from the boom period. Carriers budget is at 15% of revs which is normal versus 30% in 2000 which they paid for by borrowing. Same with enterprise- budgets are more normal with no y2k and need to quickly redo their ERP etc and no borrowing to pay , use profits only and profits are low.EMS and OEM have way too much capacity. EMS running at 50% or less except in china. OEM plants costly, inefficient and will be closing. So this will be good for EMS which can fill their plants with more outsourcing. But it will take time as no more plant buying, just transitional agreements per CLS. EMS place to be with outsourcing increasing but when to buy is question. This will take time. In the meantime if you have cash you want prices to stay low. I have said 6- 9 months at least. This board should keep watch for the sunrise. We do not want to caught snoring in our bunks below when the day breaks. In the meantime all EMS are getting their houses in order with better software linkage, inventory turns, cash recycle as said recently by FLEX, CLS, JBL. Even poor SLR is trying but it made a lot of bad acquisitions just before the bubble burst so it is bringing up the rear. I am keeping cash and waiting even though I may have to pay a couple of points more later. But this board should keep a good watch on this and not rely on CNBC which will be too late. Rich

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