RESEARCH ALERT-ABN Amro cuts contract manufacturers
LOS ANGELES, Feb 28 (Reuters) - Brokerage ABN Amro on Thursday cuts its earnings estimates for four of the top five U.S. contract manufacturers, saying recent data indicates the recovery in the telecom sector, a key customer, is progressing more slowly than expected.
Analyst Keith Bachman lowered estimates for Celestica Inc. (NYSE:CLS - news), Jabil Circuit Inc. (NYSE:JBL - news), Sanmina-SCI Corp. (NasdaqNM:SANM - news) and Solectron Corp. (NYSE:SLR - news), citing evidence of a delay in the recovery in telecom spending and indications that the recovery may be ``modest at best.''
He said capital spending cuts by major telecom carriers such as BellSouth Corp. (NYSE:BLS - news) were a bad sign, as was Motorola Inc.'s (NYSE:MOT - news) outlook for global wireless spending.
The $100 billion electronics manufacturing services
(EMS) sector derives most of its business from
high-volume, low-margin production of products
such as cell phones, data and networking products,
and video game systems.
But Bachman's note was not entirely negative. ``We remain optimistic on the enterprise market and believe that a
recovery in (information technology) spending is under way, lead by storage area networking,'' he said.
Bachman lowered the calendar 2002 earnings estimate on Celestica to $1.40 a share from $1.49, and cut his 2003
estimate to $1.75 from $1.87. He lowered his 2003 revenue estimate to $12.5 billion from $13.1 billion.
For Jabil, Bachman lowered his fiscal 2002 earnings estimate to 40 cents a share from 46 cents, and his revenue estimate
to $3.5 billion from $3.6 billion. For 2003, he cut his earnings estimate to 65 cents a share from 76 cents, and his
revenue forecast to $4.2 billion from $4.5 billion.
For Sanmina-SCI, he cut his fiscal 2002 earnings estimate to 11 cents a share from 15 cents and his revenue forecast to
$10.2 billion from $10.5 billion. For fiscal 2003 he cut his earnings estimate to 50 cents a share from 62 cents but left his
revenue forecast unchanged.
For Solectron, he cut his fiscal 2002 earnings estimate to 18 cents a share from 22 cents, and cut his revenue estimate to
$12.5 billion from $12.8 billion. For fiscal 2003, he cut his earnings estimate to 40 cents from 50 cents and cut his
revenue forecast to $15 billion from $15.3 billion.
He did not change any estimates for the other top-tier contract manufacturer, Flextronics International Ltd.
(NasdaqNM:FLEX - news). |
