Peter,
re: <<While both Jabil and Solectron count Lucent as a customer, Lucent doesn't represent 15% of sales like at Celestica, said James Savage, an analyst at Thomas Weisel Partners. "The most severe problems that Celestica has are not problems you will see at Solectron or Jabil," he said.>>
So what? Does Savage think that LU's problems are worse than NT's? And CSCO won't be ordering much equipment if their customers aren't buying. I don't know exactly what's going on what that $2b of inventory that CSCO "wrote off" last year, but I think they're still selling some of it--I may be wrong about that, but so I've read anyway--in order to make their numbers ("no cost sales"). Not to mention other big ECM customers like Ericsson, Nokia and ALA.
Jabil may be in the best position of the Big Five, but the business itself is intrinsically cyclical. You don't build a lot of stuff that you can't sell, unless you're in China and need to keep hordes of young men busy and the cost of building and storing or destroying is cheaper than the inevitable social unrest caused by the idle hands of restless male youths. And Jabil, having held up so much better than the others, is now the most expensive stock in the group, with plenty of room to fall should it seek their levels.
The stocks, assuming they can keep their creditors happy without dissing shareholders in the process, are getting cheap if you take a long view, but they will get to be really serious bargains over the next few months, IMHO.
Balance sheet management is crucial now.
Sam |
