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Technology Stocks : Benchmark Electronics (BHE)
BHE 42.78-2.0%Dec 31 3:59 PM EST
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To: Bill Cotter who wrote (62)2/14/2000 5:05:00 PM
From: rich evans   of 75
 
I decided to keep my stock. Here is my post on Yahoo as to why.

I would agree the problems are AVEX but that is also the opportunity. Last Quarter was 340 in revs at 6.6% gross margin. Although they wouldn't break out AVEX it seems clear that BHE portion was around 170 mill and Avex was down to 170 mill from the expected 210 run rate when they bought the company as they lost major customer worth about 40 mill a quarter.So the gross margins on AVEX must be under 3% and old BHE operating at historical gross margins of 10% giving a blended 6.6%. So they also reduced 2000 expectations by at least 100 mill revs to 1.7 Bill from the 1.8 to 2 bill orginally. So we have a turnaround situation here in my opinion and if they turn it around and AVEX can do at least 6% gross margins and they can get SGA under control then earnings could accelerate. They must fill the AVEX plants operating at 55% capacity versus BHE plants near 80%. Interest of 4 mill a quarter and amortization of 3 mill is ongoing cost of AVEX plus SGA extra expenses. And at around 2.9% of 170 million ,Avex is only contributing about 5 mill in gross profits. They didn't give these numbers at cc but they did indicate the problem. Several AVex plants are loss plants right now. I think they will turn it around and stock will rebound well when this becomes clear but it will take some time so payoff is not to 2001 in my opinion when new programs ramp which they talked about.

Rich
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