GS: Flextronics International
LTD.
EPS (FY Mar) 2005E $0.70 In-Line/Neutral
(FLEX) $14.01
Sanmina-SCI Corp. EPS (FY Sep) 2004E $0.24, 2005E $0.46 In-Line/Neutral
(SANM) $7.01
We & others have offered similar, broad views on Jun-Q: generally inline; maybe
upside from CLS/FLEX; maybe guidance issue for SANM. Combined with macro &
tech concerns, EMS shares have fallen 10-25% recently, so it's hard to see news so
bad that it's not in the stocks. E.g., SANM & PLXS have low expectations; we like
that going into results. On the other hand, CLS & FLEX, have somewhat high
expectations; a N/T risk, though we do think they'll deliver. BHE pre-released inline
or better news; we like it here, but it'll take strong results to move up. MACRO
CONCERNS; IS IT NEW SEASONALITY? As we step back to reflect on concerns
that enterprise h/w is merely OK for Jun-Q, we keep coming back to a hypothesis
that seasonality may be different now, more back-ended, than the 90s. The 90s had
many "must have" rollouts & upgrades; today, besides security, most spend is "nice
to have" & can wait until 4Q or late qtr negotiation yields low price. Rather than
concerns we're at a peak, we're thinking that 04, like 03, may just be very back
ended. |
