Hi Paul, I guess you saw the news where SLR got nervous because of some stupid financing coming due in Jan and decided to issue $2bill in debt with one billion of it really equity (aces) mandatorily covertible at a price of $11.58. Thats a lot of shares and a sweet deal and I assume caused a lot of short selling the past few days. Marks indicated at the midquarter cc, that all the top tier were good companies including JBL and that FLEX could not be expected to win so much more deals then the others in the future as they have in the past. The SLR quidance and JBL guidance for a slow Feb quarter will probably be the same for all. Reminds me of SCI's president Gene Sapp who when asked about the business/telecom recovery said that for the whole year everyone has been forecasting a recovery in two more quarters. Eventually they will have to be right and now again it is two more quarters. Anyway I remember back in l997 before the high valuations of EMS, that PSRs around 1 were the norm and now with earnings a poor indicator , I tried to do some projections based on PSRs and went back to these more convervative numbers since the bubble/boon bust has contracted value levels back to 97 IMO especially in this business enviroment. Anyway I came up with : JBL-- Nov Q1 895, Feb Q2 825, May Q3 910, Aug Q4 1090 === 3720. This is a billion less then earlier guidance. So with 200 mill shares we get a PSR of 1 at 18.6 anda more forward PSR of 1.25 of 23. SLR--- Nov Q1 3150, Feb Q2 2850, May Q3 3150 and Aug Q4 3750. This equals 13 bill and with 825 mill shares which could be 1 bill if though in converts, you get 15.75=PSR 1 and forward PSR of 1.25=19.6 at 825 mill shares.
SANM--- Dec Q1= 2450, March Q2= 2250, Jne Q3 = 2700, Sept Q4 3600 == 11 bill. This is 700 less then companies guidance of 11.7-12 bill but probably OK since JBLs pushouts will be the same for SANM . Anyway that gives $20 share at 545 mill shares and 25 at 1.25 PSR. Flex--- Sept q2 3.25 , Dec Q3 3.4, March Q4- 3.35, June Q1 3.8 == 13.8 bill and with 510 mill shares this gives PSR of 1 at $27 and forward 1.25 of 32.5. But these numbers are without new deals,new outsourcing etc. The unknown is when I/T spending and telecom capex will return and there seems to be a lot of disagreement over this. Anyway I think SLR is a good buy right now and have been a buyer of both the stock and calls.
But Flex is the new star but as a valuation play, SLR should be OK IMO but there may be a wait at least till Spring. But once it starts filling up its factories which are only at 50% right now and new outsourcing is announced, we should see some good percentage moves IMO.
Rich |
