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To: Michael Anthony who wrote (1799)	10/3/1998 2:12:00 PM
From: kolo55	Read Replies (3) \| Respond to of 2542

FLEXF will have better earnings, but JBL has visible growth. Over the next two earnings releases, FLEXF should have much better EPS. I suspect they may beat the consensus of 57 cents for the SepQ, and the DecQ will be huge with the consensus at 66 cents. I think they can beat that estimate as well. Here are my recent comments on recent Flextronics statements: Message 5811028 Jabil will probably beat the scaled down consensus for the AugQ of 34 cents due to the early close of the HP purchase, and a rebound in Scotland late in the quarter. The consensus estimate for the NovQ of 38 cents seems way too low, and I expect it will be revised upward after the conference call next week. Based on EPS, it would seem Flextronics has more value here. But consider forward revenue and earnings growth visibility. Based on just the HP deal, the two new customers who will each contribute at least 10% of sales by next August (Analysts say these customers are Dell and Bay Networks), and the rebound in Quantum and 3Com business, Jabil will have at least 100% revenue growth from the AugQ this year to the AugQ next year. This kind of visible revenue growth is incredible. And it doesn't even include the impact of a rumored Lucent deal and more Cisco business. My own estimate of a revenue run rate by next AugQ is $3.7B a year!! This is over $900M per Q versus the $310M analysts have used for the AugQ this year, based on company forecast of flat revenues from the MayQ to the AugQ. (Personally I expect the company to report $350M in revenues because Scotland didn't see as much idle time as feared, and a $30M revenue contribution from almost one month of operations from the HP plants in Boise/Bergamo.) The analysts are expecting the margins to drop significantly. Now even if the after tax margin drops significantly to 4.5% net, then Jabil could do somewhere around $1.00 a share by Aug99Q. Do the numbers yourself, and you can see the impact of the growth. Remember that Jabil's current net AT margin was about 5.6% over the first 3 quarters of FY98. The smart analysts and money managers know this, and that is why Jabil seems under heavy accumulation at this time, with rises on large volume, and declines on less volume. If the momentum guys grab hold of Jabil, we could see trade 25 times earnings at some point, and see a price of 100 in the next 18 months. Investors are probably going to be willing to pay a higher multiple for Jabil because of the better visibility of revenue and earnings growth, as well as a decreasing dependence on their previous Big 4 customers. Jabil will have 8 big customers, that read like a "Whos- Who" of high tech: Cisco, 3Com, Quantum(DLT), HP, Dell, Bay Networks(Nortel), Lucent, and Compaq, not to mention Apple's iMac boards. Flextronics could easily see revenue growth exceed 50% over the next twelve months, but the growth is less visible. By SepQ next year, I think Flextronics will be doing about $600M per Q. This is still great, and considering Flextronics only has about 25M shares out versus Jabil's 38M, the revenues per share will still be good, and we could see 80 cents a share for FLEXF at that point. I think they might see faster growth, but its simply not as visible as Jabil. So in summary, FLEXF is earning more per share and should grow earnings nicely, but JBL has a visible explosion in revenues and earnings in front of them. I like em both, and hold big positions in each stock. Paul