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Technology Stocks : Elamex(ELAMF) -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (141)	10/29/1997 5:11:00 PM
From: kolo55	Read Replies (1) \| Respond to of 276

I disagree the company is "mismanaged". The biggest reasons they missed the quarter, and last quarter, were as follows: 1.Customer moved to China to be closer to their customer base. Elamex management really can't control this. Someday they may be large enough to go international, but not yet. They are moving to bring in new customers. BTW- I now believe the new "large aerospace customer from the Pacific NW" is Boeing, and they should contribute $10-12M in revenues next year. 2.Peso didn't drop against the dollar this year, despite 20% Mexican inflation. In the last several days the peso has dropped about 5-7% against the dollar. Management can't control the exchange rate, although I wonder if they might be able to hedge some of this risk out. I'd rather not have them hedge, and just let the currency variations even out over time. This will cause the earningst to swing, but over time, this won't impact the LT investor. 3.The new customers pushed out the start-up and ramp-up of new projects until the next quarter. Again the management got caught in a transition period as the customer base changes (and seems to be strengthening to me). The same thing has happened in the past to well-run companies like Jabil and Flextronics, and is happening to Hadco and ACT Manufacturing right now. A number of things just went wrong for them. I think some of this was telegraphed last Q, and I tried to caution this thread against being too optimistic too soon. Personally, I think the long term picture is actually brightening for Elamex, and the stock is price amazingly cheap considering. I expected a repeat of about 28-29 cents a share, and so even though they fell short, I'm not too distressed. If things start breaking the other way on the peso front, and the new customers come on-line, and the company makes just one of the three acquisitions they are working on, then the next year will look great. If things go wrong, I still think the stock is carrying enough margin of safety in its pricing, that the downside is limited. Well, this is just my opinion, Paul