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Strategies & Market Trends : Sharck Soup

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To: Softechie who wrote (31449)	7/19/2001 3:25:35 PM
From: Softechie	of 37746

SANM SANMINA (SANM: $17.81) 7/19/01 Reports F3Q01 In-Line With Pre-Announcement Annual EPS Prev. EPS 9/02E $0.86 9/01E 0.84 9/00A 0.82 Rating: STRONG BUY 12-Mo. Target: $26 Although weakness continued in all end markets and visibility remained limited, SANM did indicate they've seen improved forecasts for new product introduction programs for long-haul and last-mile programs, yet no significant orders have yet to materialize. Restructuring – Mgmt will be taking a $175-200M restructuring charge in F4Q01 to eliminate 15-20% of PCB fab capacity and 10% of PCB assembly capacity in N. America. This should translate into capacity utilization increasing to 60-65% in 6 months from 45% currently. Inventories – SANM did reduce inventories by $42M (7% seq decline) yet inventory turns declined to 4.8x from 6.2x in MarQ. For the SepQ, inventories are expected to decline an additional $40-$50M which could improve inventory turns to 4.9-5.2x. We are lowering our F4Q01 EPS to $0.08 from $0.10 driven from 5% seq decline in revs to $738M. Applying a 23x multiple on CY02 cash EPS of $1.14 yields a $26 price target. Reiterate Strong Buy. From CSFB.

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