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Technology Stocks : Flextronics International (FLEX) -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (675)	5/26/1998 1:55:00 PM
From: John Morelli	Read Replies (1) \| Respond to of 1422

What does ASP stand for. I don't get the acronym. I'll take a stab at your question. If the U.S. went into recession this would reduce sales of OEMs and therefore their outsourcing requirements one would think. I guess this is a scenario where I would prefer to be in another sector. I can't think of another scenario unless of course I found an even stronger performing industry sector trading at lower prices. There is no recession in sight as far as I can tell although most people can't normally forecast recessions as we all know.

To: jeffbas who wrote (675)	5/26/1998 3:55:00 PM
From: kolo55	Read Replies (3) \| Respond to of 1422

ASPs mainly a factor in PC sector. I don't think selling in Flextronics is due to concerns over pricing pressure. Flextronics assembled products are mostly in telecom, networking, and consumer sectors. The price pressures are most intense in the PC sector, where the trend is toward the sub-zero PC, HP is taking market share by selling at a loss, and there is a shift in the manufacturing trend toward distributors assembling build to order units near the customer. I think Kent's plans to open a huge new box-build assemble center in Texas may put even more pricing pressure on this sector. SCI is the company most at risk in these trends, but since I suspect SCI is lowest cost producer, I don't think they will end up losing. The shelf registration is interesting. I don't think the inside shareholders who got their shares in the Neutronics and other deals last fall will sell here. They have been able to sell since the original shelf registration last December, and none of them sold earlier this year when Flextronics traded in the 40s, and 50+. I suspect they think better times are coming, and are willing to go along for a ride to the upside. I suspect that maybe one of the new filers has elected to perhaps sale; someone dumped about a 100,000 shares today. Eventually, the market will soak up that supply. The fact that 980,000 shares have been issued for the Altatron and Conexao operations is encouraging. At a stock price of 40, these deals would be worth about $40M, yet Altatron was doing about $90-100M in sales, and the Conexao Brazilian operations were doing at least $20M. Looks like Flextronic paid about 35% of annual revenues for these businesses. Furthermore, I understand Flextronics is expanding the Brazilian operations significantly, and added a shift to the Altatron Fremont plant, which was doing only one shift. We should be seeing about $30M per quarter added due to the base operations, and could be seeing another $25-30M per quarter due to the expanded operations and extra shifts eventually. I'm still betting big time that the next three quarterly reports are going to show the world just how far this company has come. Paul