Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: jeffbas who wrote (1646)	8/2/1998 3:54:00 PM
From: Ron Kory	Read Replies (1) \| Respond to of 2542

I am not Paul, of course, but I have to chip in that foreign stocks sometimes carry higher p-e ratios that our domestic equivalents so it isn't necessarily a stigma. For example, compare PSFT and BAANF. Analysts have psft growing at a significantly higher rate than baanf but baanf has a p-e of over 50x versus 40x for psft. LHSG is a German based company with an astronomical p-e and certainly greater than any of its peers. At this time, however, being a Singapore based corporation probably isn't helping flexf's valuation. ron

To: jeffbas who wrote (1646)	8/2/1998 10:39:00 PM
From: kolo55	Read Replies (1) \| Respond to of 2542

Liquidity does seem to be an issue. Many who asked questions at the tech conferences I attended, asked questions about the liquidity of the stock. Its hard for a large holder to get in and out quickly without affecting the stock price. I think this is more of an issue than the foreign incorporation, since they view the company as an international player. Also a lot of people still tie Flextronics directly to China, even though they have diversified their business. All of this will change over the next several years. Marks told me he expects Hungary to grow to be their first billion dollar revenue center. And as the company grows revenues, the market cap and liquidity will improve substantially. The market cap is still less than $1B, about $950M. They should hit a $1.8B run rate in the DecQ (and earn 67 cents per share, according to the consensus estimate). For calendar 99, $2.4-2.5B should be doable. Of course, this company must perform and do this amount of business without glitches. And we can expect ECM companies to hit a problem every 18 months on average, based on the track record since I've been following the sector. So somewhere along the line there will be a hiccup. I'm not putting new money in Flextronics right now, because I already have so much, and because the forward revenue growth for Jabil is more visible right now with the big deals announced or apparently in the pipeline. I have advised some friends to take some long term taxable profits on their SLR shares and move the money to JBL when the spread in their stock prices hit 18 two weeks ago Monday. Paul