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 wrote (2274)	3/9/2000 10:18:00 AM
From: MGV	of 2542

Bob, I will write down my thoughts on CLS in the next day or two; in general, prospects are good there - it did become very expensive relative to the other top tiers when it reached the mid/high 50s a few weeks ago. It is basing nicely here as business fundamentals catch up to valuation. They have some of the best customers in tech and Polistek has executed very well. I have to comment on the statement Paul Klemencic made regarding relative valuation of FLEX to CLS. He states that he called for FLEX to price at a 30-50% premium to CLS "and today that is where it is." Well who knows where or how he makes such a statement but the statement is just plain wrong. See below. On a forward price to sales basis FLEX (0.9)is now at a discount to CLS (1.2). It is not priced at a premium to CLS. To repeat, FLEX is at roughly a 25% discount to CLS, not the reverse. For that reason I have been increasing a position in DIIG this year and have net sales of CLS even though I have not sold a core position. The calculation is based on a FY2001 rev. forecast of 8.4B for FLEX (FY begins 4/1/2000) and FY2000 (FY is CY, began 1/1/2000) forecast of approx. $7B for CLS.

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