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Technology Stocks : Solectron -- Ignore unavailable to you. Want to Upgrade?

To: patroller who wrote (255)	9/14/1998 4:17:00 PM
From: shane hartman	Respond to of 493

"Yahoo Poster: JBL and SLR preparing EPS surprises" Don't know if this is true or not. We will know in an hour or so ;) Anyway, roshpina posted this opinion on yahoo. Why do I think that Solectron and Jabil are preparing nice EPS surprises for us: I recently read a report by Tony Boase from A.G. Edwards regarding HADCO Corporation (HDCO). In the report, Tony said the following: "In March 1998 the demand for PCBs suddenly dropped and stayed at depressed levels for four months. We believe June represented the trough in PCB demand due to the following: ú Weekly orders improved on a sequential basis beginning the week of July 5. ú Recent weekly bookings have shown a 10% to 15% improvement over June levels. ú Backlog improved to $128.7 million at the end of the third quarter compared with backlog of $107 million reported in early July. ú ASPs in backlog did not decline compared with fiscal third-quarter ASPs. (HDCO's third quarter is: May, June and July) ú The recent up-tick occurred during the typically soft summer quarter. ú We believe the rebound in July was responsible for delivering better than-expected third-quarter revenues. ú We view the third quarter as the low point for revenue and EPS and expect the July rebound in PCB demand to continue into the fourth quarter (August, September and October) and into fiscal 1999. Customers: ---------------- Solectron accounted for 15% of net sales, and the company's top 10 customers accounted for 47% of net sales. Contract assembly represented 44% of fiscal 1997 revenues and 47% of third-quarter fiscal 1998 revenues. HADCO's contract assembly major customers include Celestica, Jabil Circuit, SCI Systems and Solectron." ----------------------------------------------------------------------------------------------------- Now, let us view the facts: 1) HADCO's orders improved starting from July. 2) HADCO's Backlog starting on August 1st improved by about 20% over that of July 1st. 3) Jabil third quarter (will be reported October 6th) took place during June, July and August. 4) Jabil is one of HADCO's major customers. 5) From the above report it is clear that HADCO was doing very good business (better than expected) during the months of July and August. These month represent two out of the three months of Jabil's third quarter (June, July and August). Conclusion: ----------------- All things being equal, it is logical to assume that HADCO's doing better business was due to increased demand from it's major customers (e.g. Solectron and Jabil Circuit) due to better business in their field. Roshpina