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Technology Stocks : The New QLogic (ANCR)
QLGC 16.070.0%Aug 24 5:00 PM EST
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To: Greg Hull who wrote (27171)5/29/2000 1:55:00 AM
From: Douglas Nordgren  Read Replies (1) of 29386
 
Greg,

Pemstar's S-1 had this to say on that.

Shortages or price fluctuations in component parts specified by our customers could delay product shipments and adversely affect our profitability.

Many of the products we manufacture require one or more components that we order from sole-source suppliers. Supply shortages for a particular component can delay production of all products using that component or cause cost increases in the services we provide. In the past, some of the materials we use, such as capacitors and memory and logic devices, have been subject to industry-wide shortages. As a result, suppliers have been forced to allocate available quantities among their customers and we have not been able to obtain all of the materials desired.

I imagine Ancor specifies the components and Pemstar sources the parts for assembly.

QLGC has three primary ECMs, I remember reading somewhere, will track it down in a 10-Q. Pemstar is not one of them, so they gain another one. That gives them flexibility wrt product cycles and market focus affected by supply forecasts.

Don't know how many components Ancor and QLogic hold in common to achieve economies of scale. Future product development would move towards some consolidations there. But if there were a component that Pemstar couldn't get enough of for Ancor, QLGC ECM allocations could augment the supply.

When the price crunches start coming from the customer and the suppliers, the companies with the most headroom will stand the tallest. Looking forward to the Roof Raising in September. This market be damned in the meantime (like we didn't already know that).

Douglas
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