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

To: patroller who wrote (1551)	5/30/1998 3:04:00 AM
From: Asymmetric	Read Replies (2) \| Respond to of 2542

Patroller, Networkers Have Higher Margins than ECM Companies. Sorry for the delay in answering your post. I think it's improper to value Bay & Jabil at the same price/sales ratio. Generally the higher up on the food chain you are, and the further you're away from cutthroat commodity competition, the fatter your profits. Wall St consequently bestows on your enterprise greater riches in the form of higher PE's, higher price/book, price/sales etc. Companies like Lucent, Cisco, Ericsson, Bay Networks, etc are "integrators" and reap the most revenue and the highest profit margins. Jabil, Flextronic, et al are commodity producers/ manufacturers and though they do well, rank behind the companies they do the manufacturing for. (Like the auto companies and the steel manufacturers.) The telecomm/networking sector will weather this upcoming storm better than any other tech sector, IMHO. The basic industry scuttlebutt is that Bay, Ascend, Fore, and 3Com will not survive the year as independent entities. Whether that holds true or not of course is anybody's guess. The hunters right now are companies: Ericsson, Alcatel, Cisco, Lucent, & Nortel, etc. I'm not familiar with Paul Sagawa so I accept your word that he is one of the more competent analysts around, and will try to acquaint myself better with what he has to say. If there's anything he has written that you can send my way, I would be more than happy to read it, and provide any feedback. Regards, Peter.