GS: Sanmina-SCI Corp. EPS (FY Sep) 2005E $0.47 Outperform/Neutral
(SANM) $8.53
SANM's analyst mtg had no material news or info with N/T impact; we maint our
favorable N/T & L/T view of shares, rated OP/N. We found the strategic review
helpful with a few new tidbits & the following takeaways: (1) Expect greater focus
on boosting vertical integration, perhaps 2x in '05; this helps boost margins. We think
China-based PCB fab is a key part of this effort. (2) Their ODM initiative continues
to impress us, not only with a good product roadmap with the current server line, but
also well-conceived plan for storage & telecom. Strategy seems well-suited for
SANM strengths & insulated from ODM competitors. (3) SANM showcased mgmt
& some operational details that reflect good mgmt depth, & operational controls;
these should yield further optg efficiency & financial benefits. (4) Mgmt laid out a
credible path to exceed 4% optg margin by CY05 end, including increased
component mfg & vertical integration, restructuring, EMS penetration growth,
favorable mix shift, & improved pricing.
27. Symantec Corp. EPS (FY Mar) 2005E $1.66, 2006E $2.00 Outperform/Neutral
(SYMC) $60.17
We hosted SYMC's CFO, Greg Myers, at our Software conf today. Overall, the tone
was positive - Mr Myers emphasized that SYMC continues to outgrow the security
market, reiterating guidance for 3Q and FY05 rev growth in the 30% range. (We've
modeled 36% growth.) Mr Myers downplayed the significance of the MFE/AOL
deal, articulating his view that AOL needs to bring additional value added services,
such as anti-virus, to warrant its premium pricing. In his view, other broadband
providers, with lower standard rates, will continue to offer security as a premium
add-on service, as SYMC's current partners - Earthlink, Tiscali, and T-Online, for
example - do today. SYMC continues to emphasize its push into the enterprise,
particularly its ability to be a strategic partner, bringing its security expertise to a
broader management offering. The CFO continues to attempt to hold op margins flat,
although they may drift up with strong rev growth. We've modeled 34.0% to 35.4%
in FY04 and FY05, resp. Reiterate Outperform. Coverage view is Neutral. |
