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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: DELT1970 who wrote (27018)11/11/2003 8:25:49 AM
From: CommanderCricket   of 206084
 
DELT,

I no longer know what to think and have been wrong about these companies for the last year. Sanmina-SCI came so close to closing their doors. However, many have turned the corner and are now cash flow positive.

I don't understand the investor mentallity in buying this industry. Margins are very skinny, even in the very best of times. Many companies are still sitting on alot of empty factories with no where to go, and then you've got the Chineese. IMVHO, if it wasn't for cheap money, many would already be gone.

The only ones who really come out ahead are the OEM's who sold off the factories (and unions). When a company wanted a new widget, it's only choice was the captive factory out back. Now the OEM's bid the EMS's guys off against one another every chance they get. The industry in some ways has become so competitive it's common for say a Cisco program "life cycle" to run through several EMS Providers. Every time, the price and margins drop. Cisco always wins and everyone else continue to squeeze. Those at the bottom like the company I work for get it the worst. I can't imagine margins (and earnings) every getting much better without significant consolidation.

BTW: Ask anyone this industry about Foxconn and their business model and it scares the Solectron's, Flex's and Jabil's to death.

Michael
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