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

To: rich evans who wrote (1377)	3/23/1998 5:52:00 PM
From: rich evans	Read Replies (1) \| Respond to of 2542

One thing about MERX that I didn't mention is that at the latest runrate, If Merx can get their margins back to industry average they would be underpriced since their present runrate PSR is about .3. Maybe this is why their price has been going up in expectation of their return to normal profits and about $2/ sh in earnings. Rich

To: rich evans who wrote (1377)	3/23/1998 7:10:00 PM
From: 18acastra	Respond to of 2542

Merix reported today. Made a lot of bullish statements about future and then caveated everything in more than just the typical legal protection manner. Backlog is down from $32mm end of last Q to $23mm this Q, and they indicated some customers are soft and some pricing is soft. At the same time, they said future will be great, demand will increase, and putting lot of capacity in place to meet. If these guys are wrong, my guess is thing blows up in thier face. Over short-term, backlog issue concerns me. Comapny said lead times have shortened, but seems to me they have work to do. Anyway, they forecasted revenues will be flat both this coming Q and the Q after. Given the inherent risk in their operating plan and the short term softness the company alluded to, as well as a historical track record of operational mistakes, surprised the stock market is willing to pay this kind of multiple (relative and absolute). Also, think no way anybody could acquire company at this valuation. Way to rich for a risky proposition. My opinion.