GS: Sanmina-SCI Corp. EPS (FY Sep) 2004E $0.24, 2005E $0.46 In-Line/Neutral (SANM) $6.67
What we know so far: (1) Jun-Q data points have been light, particularly s/w; (2)
Sep-Q outlook is likely to be inline, at best, as few mgmts will take a risk (we think
previously bullish mgmts will tone it down, because of what they see in the news, not
what they see in their business); (3) JNPR showed carrier spend is probably fine; &
(4) IBM showed that even with limited share gains, enterprise h/w spending wasn't
horrible. As discussed in our 7/14 preview, our hypothesis is that current data is not a
sign of the beginning of the end, but perhaps a sign that seasonal patterns of the 90s
have changed & tech may be more backended, like in 03. If our hypothesis is correct,
we think 05 ests should roughly hold current levels, which means many tech names
may be oversold. Below we detail EMS names that seem oversold N/T, into earnings
(e.g. SANM) and medium term, to year end. We also provide key OEM exposures to
watch for EMS implications early next week & key OEM exposures that EMS results
may foreshadow. |
