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

To: paul kneitz who wrote (1015)	12/20/1997 9:41:00 AM
From: Creditman	Respond to of 2542

I am in Finance in the ECM industry and am not an investor psychology expert (is anyone??!) but my guess is that DIIG is a new company and has made a lot of changes lately in structure .. like the IBM Austin deal, the Minnasota acquisition, the Orbit deal. Investors want to see it work for a while. There is another difference in DIIG too, I think a good difference in that they are also a component company with ORBIT and a PCB company through MULTEK and the others are more pure assemblers. I've started buying DIIG, PGTZ and CMCI again. Believe me ... BUSINESS IS TERRIFIC!

To: paul kneitz who wrote (1015)	12/20/1997 1:07:00 PM
From: kolo55	Read Replies (3) \| Respond to of 2542

Why is DIIG trading at a discount? Jabil and Flextronics are just starting a growth spurt from new plants and in FLEXF's case, acquisitions. Next Q reports should see significant revenue growth and a chance to see a significant probability of beating their estimates. Or at least to demonstrate significant earnings power. Flextronics will report at least 47 cents next Q, and by JunQ will be reporting 60-65 cents a share. Jabil reported 49 cents and by AugQ will be reporting 55-60 cents a share. I too am confused by DIIG's low price, but if you look at where each stock has come from since last February, DIIG had gone straight up due to the rapidly expanding earnings (30% per Q sequential earnings gain). This rate of earnings gain has to come down. The DecQ should be the last Q where they see 30% sequential earnings gain) and the analysts are predicting the earnings to drop slightly in the 1st Q of 98. The earnings for the last several Qs are: JunQ 19 cents SepQ 35 cents DecQ 43 cents MarQ98 36 cents I don't know why they are predicting this drop, but going from 30% a Q gains, to a 15% drop, has to have put a bit of selling pressure on the stock. Much of the growth in the near term is supposed to come from Orbit's new ASIC fab which is finally starting up. I think the results from the fab will be good, but there is more uncertainty in the ASIC market , than in traditional ECM and board manufacturing businesses. I think the market may be placing a risk premium on the stock at this point. However, given the fact that management has begun a 2 million share buyback program, I believe they have confidence in the new fab startup. And longer term, the contribution, from the new board facility in Texas, is going to be huge, methinks. I am playing DIIG long at this point by using call options. I have been able to buy a lot of Mar25 calls for about 2-3 bucks on dips, and sold my DIIG stock in the 27-28 range on spikes, this fall. Since DIIG seems to have more reasonable call pricing compared to other stocks in the sector, I have freed up my capital to chase other ECM bargains. Anyway, that has been my strategy. Hope this answers some of your questions. Suggest you try to find out why analysts expect earnings to drop 15% sequentially in 98MarQ. Paul