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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (2392)	7/26/2000 11:53:14 AM
From: G.M. Flinn	Respond to of 2542

Paul, thanks. I am aware of the fiscal year end differences and my references for 2001 are all for the next year of each co. Glenn

To: kolo55 who wrote (2392)	7/26/2000 12:02:29 PM
From: G.M. Flinn	Read Replies (1) \| Respond to of 2542

Paul, re: valuations, etc. I follow all of the same companies as you in my own spreadsheet/model, including forward looking p/e's. I, too, have been fortunate in moving money around in this sector based on relative valuations (both trailing and forward looking). Questions for you: I get the impression SCI has made a concerted effort to diversify away from PCs and into higher end telecom contracts. Eventually this should help growth rates. If you buy into this, they are seriously undervalued now vs. their peers. Also, re: ACTM. I have only followed ACTM for the past couple of years and have had a lot of success. I guess I have not experienced the issues you had w/ the co. farther back, but it appears to me that with their latest two acquisitions the co. will be at a $1.2B revenue base, with increasing focus on high end, higher margin contracts. Might it be worth a revisit? Has management made any changes for the better over the years? GLenn

To: kolo55 who wrote (2392)	7/31/2000 6:28:23 PM
From: rich evans	Read Replies (2) \| Respond to of 2542

Does your relative analysis include BHE? Bhe filed a recent S3 report which has a lot of info on debt, proforma, shares etc. At last CC they were conservative and said they would do 430 mill this quarter at 7.3% gross and 470 to 500 at same margins which are still low because of all the startup programs and expansions which will be finished at year end. Possible new 200 mill telecom customer. Next year they indicated 2.3 bill at 7.4 % but some analysts seem to think 2.5 bill which is 75 to 80 % capacity and which they indicated was possible. SGA is 3.3% Amortization about 3 mill per quarter. After their offering expected to net 100+ mill (2.75mill shares at 40) they would owe 175 mill at 9% and the conversion of the convertible( 1.95 mill shares at 40) their debt would be down from 275 mill to about 100 which is only 2 mill for quarter about versus 6 mill now. Shares out would be 23 mill approx I think, depending how you count options which are high at around 2.5 mill shares with about 700 exercizable. Margins should be higher then 7.4% also you would think next year. Half their business is AVEX which they indicated was in low 6 for margin going to 6.6 which is a high volume operation and the other is the old medium volume higher mix BHE which was running 10% gross margins.So a blend you would think would be closer to 8% and when asked they indicated startups would hold margins down plus manufacturing efficiency due to component shortages. But these problems could be mostly behind by2001 including their one time hub inventory costs. Anyway on a PSR basis BHE seems low even for a second tier. And running the number and giving a PE of 25 for second tier makes them also low.Plexus comes to mind although they don't have the engineering of PLexus. But they are 40% telecom and 35% enterprise computing. Anyway I though I would throw this out for discussion? I stillown some but have a low cost of 15 but have sold some puts on a bullish attitude. Rich