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Technology Stocks : Flextronics International (FLEX)
FLEX 63.32+1.1%11:21 AM EST
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To: steven siu who wrote (396)11/1/1997 9:08:00 PM
From: kolo55  Read Replies (2) of 1422
 
I am very excited about the deal.

I think this is excellent news and a great buy. I was concerned about the fact they used all stock in the purchase, when they are sitting on a large amount of cash. But if you read Marks letter, its clear that this will place Flextronics back in the running to buy another Ericsson facility, or bid for more Ericsson business. Marks will need his cash for that deal, especially since the original Ericsson deal requires that Flextronics maintain a certain Debt ratio.

Also this puts Phillips as one of Flextronics largest customers. We will have less reliance on any one customer. Given the new plant startup in Mexico with Lucent the big customer there, and the San Jose expansion with Cisco the big customer there, Flextronics now have 5 really big customers. Here's my rough guestimate of the customers and the amount each will contribute in the December Q:

1. Ericsson $90M
2. Phillips $30-35M
3. AFCI $25M
4. Cisco $15-20M
5. Lucent $15-20M

I now expect that the Dec Q revenues will exceed $310M. Ericsson said that they would like to be less than 50% of Flextronics revenues, and by my rough calculations, this puts Ericsson at less than 30%. Flextronics is in position to bid for another Ericsson unit as big as 2/3 the size of the Karlskrona plant. Keep your eyes peeled for another announcement.

I have heard rumors that Flextronics is looking at Brazil next. I wonder where the Ericsson facilities are located.

Paul
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