Flextronics International (FLEX) Message Board

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Technology Stocks : Flextronics International (FLEX)

FLEX 63.32

+1.1%

11:21 AM EST

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To: solderman.com who wrote (422)	12/4/1997 11:05:00 AM
From: 18acastra	Read Replies (1) of 1422

Wrong!!!! Flextronics has Ericcson profitability guaranteed under purchase contract. Secondarily, Flextronics continues to win new business from Ericcson anyway as they win new programs that were not included in original deal. There is no risk to Ericcson, on the contrary things regarding FLEXF/Ericcson relationship are stronger than originally expected. Additionally, having listened to Merrill analyst comments on Ericcsson/Nokia downgrades, they are more of a market sentiment call than anything else. They still expect robust growth, and are not changing earnings growth estimates of 20%-25%. Both these companies have foward P/E's in the low 20's (relative to FLEXF at 15). The downgrade was more sentiment/valuation/lack of earnings upside related. It is not to do with the fundamentals of the companies changing in any way. SE Asia is only 4%/5% of Ericcson and Nokia business. Key in Robbie Stephens downgrade is that their estimates were well above consensus and they were bringing estimates in line. At $1.76 per ADR, they are still showing growth of 26% (not too shabby). Robbie just had ridiculously high estimates to begin with. Both Ericcson and Nokia have robust futures in terms of growth. Doesn't matter to me what their stock price does as long as they continue to grow (and analysts that downgraded still showing 20% growth) and continue to outsource business, which they will. Stockmarket is just uneducated when it comes to understanding relationship between Flextronics and Ericcson and future prospects. Tying FLEXF in to analysts downgrades is just short-term noise. Also remember Flextronics growth comes more from winning new programs from Ericcson than the organic growth of Ericcson anyway. My opinion.

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