Flextronics International (FLEX) Message Board

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Technology Stocks : Flextronics International (FLEX)

FLEX 62.91

+2.2%

Nov 12 3:59 PM EST

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To: kolo55 who wrote (757)	9/3/1998 11:24:00 AM
From: rich evans	Read Replies (2) of 1422

Today, I am going to see Mr. Schwab to give him some more money. I thought I had a small margin but with FLEXF tanking so badly, I have decided to make it smaller. The discussions on these ECM threads have been mostly a bottoms up analysis. In trying to come up with reasons for these prices everywhere in the ECM sector, I began thinking top down. Why are there so many sellers at these prices? Much could be the result of Paul Senior's "margined to the hilt" sellers or Mutual funds needing cash, and the smaller capitalization of these companies with their smaller floats. But from a top down approach, it seems that about 40% of the world is in depression which certainly has lowered demand considerably. And the manufacturing expansion especially of Asia over past years, would indicated that their is substantial overcapacity in the manufacturing sector not to mention the commodities and oil etc. This overcapacity seems to be causing a lot more competition from the ASIANS such as in circuit boards, chips etc. effecting pricing substantially and prices of the OEM goods are also under pressure by the reduced demand. The market seems to be putting valuations therefore on the electronic manufacturing sector quite low because of this overcapacity and reduced prices/demand.The Oem,s are shifting manufacturing overcapacity risk to the ECMs and this overcapacity effects their growth and profits it would seem.Also the ECMs have in the past been thought of as an industry which handles the excess manufacturing requirements and there are still many OEmS who are not yet virtual companies and are still primarily in house. So in such an enviroment the elctronic manufacturing area values seem to be perceived as a poor future investment with cyclical low valuations. I think we in this area do not agree with all of this but with the low margins and pricing pressures/reductions bottom line profits seem suspect and even debt service for a HDCO i.e. is under some pressure. Oh well thoughts of the day on a blue day. Rich

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