Electronic Contract Manufacture (ECM) Sector Message Board

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

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To: G.M. Flinn who wrote (2211)	1/29/2000 1:59:00 PM
From: rich evans	Read Replies (1) of 2542

Thread: I think sometimes its interesting to catch your breath and muse a little on the past. When this thread was started by Paul K in January of 1997, the ECM companies were not that well known or recognized. But Paul and others recognized their growth potential and jumped on for the ride. Since then Flex i.e. has been a 10 bagger for those of us who have stuck with it. Back in 97 there were many posts on proper valuations and Paul and others indicated they thought PSR was one good measure although PEs and multiples of EBITDA etc were also discussed. Anyway ranges were used for PSR which averaged out about to 1 on a forward basis. Since then larger numbers like 2 and 3 have been bantied about. SCI because of their high volume,low margin box build model then was given about a .5 PSR. SLR was always more or at the high range of at least 1.2. So on this sunny day in Seattle, I was playing with numbers and wondering what the PSRs of some of the players might be after all the goings on, mergers and adjustments in price recently. So I made some forward looking guesses on estimates. Here is what I came up with: Flex with estimated revs of 8.5 bill by 3/2001 and 180 mill shares out equals 47 at a PSR of 1 versus price of 51 now.SLR with 20Bill revs by 8/2001 and 280 mill shares equals 71 at a PSR of 1 versus price of 70 now. JBL with about 5.8 bill revs by 8/2001 and 95 mill shares out equals 61 at PSR of 1 versus price of 62 now. SCI with revs of 10.5 by 6/2001 and 150 mill shares out equals 70 at PSR of 1 versus price of 37 now (split). Anyway using these rough forward estimates , the PSRs are still close to 1 for the top tier companies it seems and SLR has gone down somewhat depending on how many shares out you use for it but has come closer to joining the group at a PSR of 1 and SCI has stayed below on a PSR model but climbed somewhat. Of course the revs are for different year ends in 2001 but I needed to make estimates on fiscal years. Anyway if seems that despite all the goings on, the old saying "It changes but remains the same " may apply. And Michael Marks was right in suggesting back then to pick a group of the top tier companies and in 5 years you would be richly rewarded. Rich

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