Here's my current guess- Europe is smokin'.
The company was expecting $300M this year from Neutronics(Austria and Hungary) and about $340M from Karlskrona, about one third of the European revenues coming in the DecQ. This was before the new customer(s) announced for Karlskrona and before Hungary landed the HP inkjet deal and a big part of the new Philips business. Marks told me last spring that he expected Hungary to become their first $1B in revenues business unit. I suspect given the recent news on new contracts, and favorable forward looking statements, that they are on-track to move substantially toward that level next year. My guess is $800-900M from Hungary/Austria in FY2000 starting April 1st, and about $400M from Karlskrona/Sweden, and maybe $100M from Scotland. So Europe alone could contribute about $1.4B. (Before you dismiss this, realize that Europe did about 43% of $423M in revenues last Q, which works out to be $182M. This Q, Europe should do about $240M, which is an annual run rate of $960M).
The margin in Europe should be higher than Flextronics average margin. I would estimate about 4.5% after taxes. So the company could earn $63M from Europe, which is about $2.60 a share. Add in a very conservative estimate of about $1.20 from the rest of the world and you come up with $3.80 per share. I could be optimistic on the European contribution, but I think you can see the potential.
AAnother way to look at it; the consensus is $2.45 right now for FY99. But so far Astron's PCB business has trimmed about 6 cents a share from reported earnings. This business is turning and should contribute to earnings in FY2000. Furthermore, I expect the company will beat the consensus in the DecQ and MarQ easily, and probably report in excess of $2.55 a share. The company also had the JunQ trimmed by about 3 cents by electing to end the Q on the last Friday of the month.
Add in the 6 cents from the PCB business, and 16 cents of 'goodwill amortization' annually, and 3 cents from the Q end changes, and the company really is earning about $2.80 in annual earnings stream. This is the earnings stream that should increase about 30-35% to satisfy management's forecasted growth. This brings the earnings stream to $3.73. Subtract the goodwill, and the company would report earnings of $3.57.
So I get estimates of over $3.50 a share, using several different statements from management.
This is gonna get fun.
Paul |
