I wonder what's behind the missed earnings for circuit board makers, and if this will in turn hurt ESI'sdrilling sales? It seems to me that many companies are seeing a short term correction as companies try to reduce inventory and go to more effecient build to order programs. This will pose a difficult question across all lines, is it temporary or signs of something worse? Add in uncertainties in Asia and you've got several issues to worry about.
Any thoughts about the trend of mom and pop shops to be taken over by larger companies like Jabil and Solectron. As this occurs, will it hurt or help ESI sales? Surely, margins are going to be under pressure and equipment with high return on investment will be important to survival. Have you heard any statistics about how quickly these machines pay for themselves?
Regards,
Mark
HADCO CORP. (HDCO) 40 11/32 CLOSED. The news is more common and not as shocking as before, but the results are the same as the industry slowdown in the contract manufacturing sector for electronic interconnect products are expected to hurt Q2 results. In fact, Q2 earnings are expected to come in below its Q1, and the slowdown in the electronic sector are now projected to spill-over into Q3, possibly hurting results in that period as well. According to Hadco, it expects Q2 sales to come in between $200 and $210 million and operating earnings of about $0.50 a share, hurt by customers who have placed previous orders on hold due to slower market conditions. This is significantly below the First Call estimate of $0.82 a share, and year-ago profit of $0.91 on sales of $180.7 million. Results for this period are also expected to be sequentially down from its Q1 profit of $0.90 a share, although sales will be marginally up from last quarter's $198.3 million level. Along with the lower sales and earnings that are projected for Q2, bookings are running at a lower pace than in the previous quarter, prompting the company to caution about its Q3 results as well. Because of the industry slowdown, Hadco expects to record charges of $6 to $8 million in order to consolidate two East Coast quick-turn manufacturing facilities and eliminate 125 jobs. In addition, the company expects to record charges of $63 million for the write-off of in-process research and development costs associated with its acquisition of Continental Circuits. The latest warnings news will not be taken kindly by investors as the stock is already trading under $33 a share on Instinet. With the stock already being cut in half from the high of $75 5/8 reached last summer, there is still downside to this issue as it should set a new 52-week low today after last night's warning. |
