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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT
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To: Rob Preuss who wrote (1228)9/4/2000 8:00:46 PM
From: G.M. Flinn  Read Replies (1) of 1250
 
Rob, OT: re: CEMs and component suppliers

Rob, I have to believe that with the seemingly never ending growth the CEMs are experiencing, and the only barrier to that growth apparently being the component suppliers, that it is worth a look with your dry powder at who exactly these growth impeding component suppliers are. I have a good bud in the CEM business, and he tells me that they absolutely are hamstrung on tantalum capacitors (just confirming what all the CEMs are publicly saying along with the analysts). Lead times as long as a year are the norm now. The component suppliers, mainly KEM and VSH among others, are growing capacity 40% while jacking up prices all along the way. They are valued by the market as if they are "disk drive guys" and the growth is not sustainable. My friend tells me they are being smart re: capacity increases, and it looks tight out a very long ways. If you can get comfortable that this is true, and the underlying business supplying all the CEM co's is sustainable and growing (a premise you must believe or all the CEM stocks are ridiculously overvalued) then I think you will find some real value here. Check those component co's out. For what it is worth, I think KEM is a screaming buy. Good luck.

Glenn
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