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

To: 18acastra who wrote (1276)	3/4/1998 2:47:00 PM
From: kolo55	Read Replies (1) \| Respond to of 2542

Yes- the big run-up last week is not continuing. Some of my notes from the Robby Stephens conference (all these comments are my interpretations and opinions): Overall, all the ECM companies started off showing the large growth expected in this sector (25-27% a year for the next five years). SCI and Jabil and Flextronics and Plexus all said basically the same thing we have heard on this thread since it started. Park Electrochemical (PKE): Good, interesting presentation, but see this post: Message 3597846 I wish I could say I knew how to interpret the answer I got. SCI Systems Olin King presented. The company is adding SMT lines rapidly, up to 220 lines from 180 last year, and each line costs on average about $6M. They even cranked up 10 new PTH lines. When questioned on drops in ASPs of computers and related products, he said that the ASP declined about 30% over the last year, but that unit volumes grew 50%, so net they saw 20% growth. He said "this is the nature of the business". He said they made 4M subassemblies for inkjet printers this last year, and this year they plan to move to box-build these units. (I believe this is the HP work at their Vancouver plant that they are planning to outsource.) I asked him what geographic region was seeing the largest growth, and he said with no hesitation, "Europe". They are just now getting on the outsourcing trend, and OEMs like Ericsson, Phillips, Nokia etcetera are outsourcing large amounts of business. Flextronics Again a very bullish growth scenario was laid out by Flextronics. I posted some comments by Flextronics on the thread: Message 3590924 Message 3596497 Plexus: Less bullish about growth projections than the other companies, but they have identified what they believe is a significant growth niche. They are focusing on engineering new products for larger OEMs who don't want to waste their engineering time on designing small products that only do $10-20M a year in revenues, but who need these products to support the rest of their product lineup. It was a very different and interesting presentation. They mentioned the problem last Q was due to some Asian impact. I think that has been covered over on the Plexus thread; I might get the chance to post over there later. Jabil: I think most people have seen the news release on Jabil's comments about the Asian impact at the conference. Overall, the presentation was a good growth story, and they the largest crowd by far of any of the ECM companies (although SCI got a large crowd as well). I think we are in the right sector, and I still like Flextronics the best long term in the sector. It has the most leverage and potential for the growth I expect. Paul

To: 18acastra who wrote (1276)	3/4/1998 7:49:00 PM
From: kolo55	Read Replies (2) \| Respond to of 2542

Ouch- both Intel and AMD warn. This could cause a sector downturn, particularly in ECMs that make a lot of PCs or peripherals. Advanced Micro Devices Inc. (AMD) ADVANCED MICRO DEVICES INC said its net loss in the 1Q would "increase significantly" compared to its loss of $12 million in the 4Q of 1997. The chipmaker also said revenues in the 1Q would "decline significantly." It had 4Q revenues of $613 million. The warnings were contained in the company's form 10-K annual report filed with the SEC on Tuesday. (Reuters 09:12 AM ET 03/04/98) Intel Corporation (INTC) After market close, INTEL CORP said its 1Q net income and revenues will be below expectations due to weaker- than-anticipated demand from personal computer makers. Intel said it now expected its 1Q revenues to be about 10% below 4Q revenues of $6.5 billion and gross profit margins in the range of 53% of revenues. Wall Street analysts had been expecting Intel to report 1Q earnings of 93 cents a share. For the 4Q of last year, Intel reported net income of $1.7 billion, or 98 cents a share. Intel said that its first quarter earnings shortfall is primarily due to the part of its business called OEM turns, where PC makers order and receive their chip inventory within one quarter. (Reuters 04:39 PM ET 03/04/98) Paul