Jabil Circuit (JBL) Message Board

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Technology Stocks : Jabil Circuit (JBL)

JBL 210.99

-3.8%

3:59 PM EST

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To: Gopher Broke who wrote (5613)	7/10/2000 8:37:50 PM
From: seacruzer	Read Replies (1) of 6317

You quoted Patroller: ""when things slow down (economy, semi's)the outsourcing just kicks into a higher gear"" and commented "That doesn't make a lot of sense to me" P, let me take this one... Customers that are 100% outsourced (like most PC OEMs) do decline when end consumer demand slows down, but it is still a 70%+ vertical world... when an OEM building product through captive factories slows down, they bleed bad, while their competitors that use outsourcing have fully variable cost (eg, no blood). Broad market slowdowns have historically accelerated the conversion to outsourcing by vertical OEMs, resulting in a net short term slowdown, followed by an intermediate term pop in total demand (from newly outsourced products). Patroller gets it... a slow down in overall demand increases CEM growth rates on an intermediate time horizon. Unfortunately, this often occurs as general demand recovers, with a doubling up of new demand that exceeds expansion capacity. High class problem.

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