Electronic Contract Manufacture (ECM) Sector Message Board

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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector

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To: Sam who wrote (2493)	3/11/2001 2:36:44 PM
From: rich evans	Read Replies (1) of 2542

Every CC I have listened to cited overbuilding due to overprojecting by the OEMs especially the TELCOs and the overpurchasing of parts because of componenet shortages. It seems like each major TELCO all projected this huge increased demand individually for their specific company . Demand was their but they had to share it with the rest of the industry as do the ECMs. So I think we have a combination of an Inventory problem plus a minor slowdown. This appears to be a complete stoppage because of the inventory problem but in fact is a slow down from a huge buildup. The projections by each company for each company were as if they were the only ones out there so the demand projections were greatly exagerated. Then with our BtoB just in time systems and software , this erroneous info was sent thru the system and everyone projected and reacted to it , thus creating a inventory problem from the component guys, to the ECMs to the OEM/ and system guys. And the customers especially in TELCO (ILECs)(CLECs) and all the ATTs,Worldcoms, and other fiber guys overdid it too in their projections. So even though we still have some good capital spending budjeted , it will take some time for all this inventory to work its way out and through. Also to add to the problem, all the IT managers IMO are delaying waiting for the new technoloy from the likes of MSFT and Intel (64 bit stuff) and P4 and chipsets with newer buses i.e. and we lost the dot.com business so we see this all piling up into inventory . But the flood gates should open eventually and in the meantime it is gradually working its way out. This is JMHO . Does it make any sense? Rich

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