Flextronics earnings release on October 15.
Flextronics home page says that earnings will be released on October 15. My bet is that FLEXF will rebound to its historic trading range in the high 30s prior to the release, and may bounce into the 40s after the release. This is a great buying opportunity for traders, as well as longer term investors. I bought some FLEXF yesterday.
The sell-off yesterday was on light volume, although it looks like a couple of 50,000 share sells occurred. It wasn't like the big blocks sold Sep 1 through Sep 4. Considering a number of FLEXF customers got hammered recently, like AFCI, ERICY, CSCO; I can understand why FLEXF fell. The customer stocks fell because of worries about further growth; these stocks had various growth premiums priced into their stock prices. However, if we buy the outsourcing story, Flextronics can continue to see growth in revenues and earnings even if their customer growth levels off. We know there are unprecedented deals being outsourced due to activity at Jabil and Solectron. Marks said that Flextronics was getting their share of this new business.
Normally I would discount a statement by a CEO like that a lot, but Marks and Dykes have been pretty straight shooters in the past, revealing all the glitches, mistakes, and write-offs well before they were forced to in SEC filings. How many CEOs listed their three biggest mistakes in interviews with the financial press the way Marks did? I do tend to trust him more than most.
BTW those three mistakes were:
- the purchase of the Wales company A&A ("we bought in the wrong location"). It should have been Ireland or Scotland, and now they have shut down Wales and moved to Scotland.
- Overpayment for nChip. (They ended up selling off the nChip 'fab' and spinning most of rest off to Itarsia, their JV with Dow Chemical).
- Delays in building a stronger international sales force. (Today they have a strong international sales presence.)
Given Marks credibility earned on prior bad news, I find the bullish statements made by Marks and Dykes very credible.
Paul
P.S. - tomorrow night I will paste some more of my posts to the Yahoo FLEXF thread. |
