Patroller, Networkers Have Higher Margins than ECM Companies.
Sorry for the delay in answering your post. I think it's improper
to value Bay & Jabil at the same price/sales ratio. Generally the
higher up on the food chain you are, and the further you're away
from cutthroat commodity competition, the fatter your profits.
Wall St consequently bestows on your enterprise greater riches in
the form of higher PE's, higher price/book, price/sales etc.
Companies like Lucent, Cisco, Ericsson, Bay Networks, etc are
"integrators" and reap the most revenue and the highest profit
margins. Jabil, Flextronic, et al are commodity producers/
manufacturers and though they do well, rank behind the companies
they do the manufacturing for. (Like the auto companies and the
steel manufacturers.)
The telecomm/networking sector will weather this upcoming storm
better than any other tech sector, IMHO. The basic industry
scuttlebutt is that Bay, Ascend, Fore, and 3Com will not survive
the year as independent entities. Whether that holds true or
not of course is anybody's guess. The hunters right now are
companies: Ericsson, Alcatel, Cisco, Lucent, & Nortel, etc.
I'm not familiar with Paul Sagawa so I accept your word that
he is one of the more competent analysts around, and will try
to acquaint myself better with what he has to say. If there's
anything he has written that you can send my way, I would be
more than happy to read it, and provide any feedback. Regards,
Peter.
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