Pemstar Advances as Investors Bet on Outsourcing
Rochester, Minnesota, Aug. 8 (Bloomberg) -- Shares of Pemstar Inc., a contract manufacturer of communications- and industrial- related equipment, rose 23 percent in their first trading day as investors bet more companies will hire out some manufacturing.
Pemstar shares rose 2 1/2 to 13 1/2 in Nasdaq Stock Market trading of 5.3 million, rising earlier to 13 9/16. Pemstar designs and builds printed circuit boards. It also assembles systems and provides other services for the communications, medical, data- storage and industrial-equipment industries.
The company, based in Rochester, Minnesota, sold 8.4 million shares yesterday at $11 each, raising $92.4 million. Pemstar was founded in 1994 and has about 1 million square feet of manufacturing space in 10 facilities in the U.S., Mexico, China, Thailand, Netherlands and Singapore.
Demand for contract services is growing as companies such as Motorola Inc., Nokia Oyj and Nortel Networks Corp. try to cut costs and focus on research and marketing. Sales of electronic- manufacturing services totals about $90 billion a year and is expected to rise 20 percent a year for the next several years, according to John McManus, an analyst at Needham & Co.
``Demand for outsourcing services is becoming more pervasive,'' McManus wrote in a recent report. ``We believe original-equipment manufacturers will eventually turn over most of their manufacturing.''
Pemstar said it will use the money raised in the offering to repay debt, pay for recent acquisitions and for other purposes.
The stock offering was lead by Lehman Brothers Inc. and Robertson Stephens & Co. Pemstar trades on the Nasdaq stock market under the ticker ``PMTR.''
Aug/08/2000 16:18 ET |
