Listened to AVX CC
vcall.com
- Japan now starting to pursue AVX for products due to shortages
- Sector not being flooded. Would sell more if had more to sell. Austrialian customer flew to AVX to get parts because production line was shut down.
- Will enter longterm agreements with some Japanese companies within 60 days. Not entering short term agreements because not historically dependable. Japanese feel 1-3 years of shortages will continue.
- Consumer market was dead two years ago and now coming back.
- Korea expect to made more phones in second half than made in the first half. Apparently Korea stopped $50 subsidy for phones.
- Second half will be on 20% growth over first half in cell phones. Not enough components to make phones and infrastructure to support phones. 450M phones to sold this year and 600M projected next year. Phones become a fashion accessory and buy whatever is fashionable.
- Phone sales flat due component shortages not due to demand slack.
- Believe Europe will grow in the summer and historically 50% of cell phones are sold in the fourth quarter there. Palm, HDTV, PC manufacturers all want parts. When demand was dead two years ago, no one wanted long term agreements, now they want long term agreements due to shortages. Don't see price reduction due strong demand. Price reduction is first sign of slowdown.
- Adding capacity to meet customer request.
- Never seen demand so high since been in business. CEO in business 42 years.
- Growth of consumer products in Japan (ps2) is fueling demand and growth outside Japan for component products.
Q&A with analysts
- 25-30M of business with Japan this year. Next year could be 100M. Could be mostly tantalum capacitors vs. ceramic capacitors. Pricing will be same as elsewhere.
- Demand due to all phase of the market strong vs. one strong and others weak; Data processing, telecom, military, medical electronics.
- Disposable phone is something new we never seen before. Huge driver now.
- Comment on the SSB Tantalum prices going from $1 to 35 cents rumour on spot market. AVX doesn't sell in this gray market, less than 1% of sales. We sell our products for 10 cents so this gray market is a non event. People buy components and sell them on the open/gray market.
- Demand for ceramic capaictor increasing. Palladium and nickel capacitor - AVX can charge more since special order.
- AVX supplies component to cell phone mfr. Reason that these companies only meeting 450M this year vs. 500M orginally forecasted was the component shortage problem not flagging sales.
- Drivers, flash memory, tantalum capacitors were largest shortage for cell phone industry.
- Don't see any evidence of companies double ordering. Have real visibility by watching distributors. When they start building inventory then that one sign of a slowdown. we know they are not building inventory becasue we monitor them. Usually Japan has not problem getting parts. Sony person said first time that they could get a chip resistor.
- Book to bill of 1.22.
- MOT is a major customer and we are supplying them more parts. Demand is strong. Everyone is telling us that would like more parts.
- Have sold parts for Playstation and some Japanese drive drives for the revenues.
- Expect to have a better second quarter then first, but will not see an increase 100M in sales sequentially. Looking for 10-15% increase in sales sequentially. 20% sequentially not sustainable.
- For 2001, 20-25% growth per year is comfortable for company.
- We don't create a market, we supply a market. We make bricks and mortar for all the companies. We minimize the cyclical nature by selling to all. Becoming less cyclical.
- Raw material shortage is not problem. Shortage of tantalum in industry. Because bought raw material and have long term contracts with industry.
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Due to time, only listened once.
AVX story confirms KEM CEO interview. Interesting to see Japan starting to go outside thier vendors. Have to see if KEM the same.
Jack |
