SLR is often discussed on the ECM thread . It was upgraded today in the news.
NEW YORK, April 5 (Reuters) - Deutsche Banc Alex. Brown said Wednsday analyst Michael Carboy has upgraded Solectron (NYSE: SLR) shares to strong buy from buy and raised his estimates of the company's 2001 earnings based on its outsourcing agreement with Nortel (TSE: NT).
--Solectron's agreement to purchase Nortel plants, "the largest OEM divestiture to date in the EMS industry, is in our opinion a milestone that confirms that the outsourcing model is stronger than ever," he wrote, estimating the purchase adds $2.5 billion of annualized revenues with the effect fully felt in Solectron's fourth fiscal quarter ending in August.
--Carboy increased fiscal fourth quarter and 2000 revenue estimates to $4.9 billion and $14.1 billion from $4.6 billion and $13.8 billion, respectively, reflecting continued growth and the incremental revenue from the Nortel assets. Also adjusted earnings per share estimates for those periods to 25 cents and 85 cents from 26 cents and 86 cents respectively, to reflect the goodwill amortization created by this transaction.
--Increased fiscal 2001 revenue and EPS to $20.93 bilion and $1.12 from $18.78 billion and $1.10, respectively. "We note that our revenue estimate is higher than management has affirmed in recent conference calls. In reviewing the growth opportunities in the industry and in light of management's comfort with a $5 billion plus fiscal 2001 Q1 revenue level, we believe increasing our fiscal 2001 top line estimate above guidance is reasonable
I think the estimates are low. And don't understand the $1.12 per share earnings estimate based on 21 bill in revs for 2001 and net margins of 4% and 614 mill shares. They should still have no net debt I would think even after these acquisitions since they had I think 1.5bill at last report.
Rich |
