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

To: kolo55 who wrote (1954)	1/15/1999 3:24:00 PM
From: Rick Kraus	Read Replies (1) \| Respond to of 2542

I added some more FLEX this morning at 43 anticipating good news next week. I was stopped out of LU earlier this week and I'd have thrown it back to LU but I've got more faith in FLEX near term. OT: Here are three more great Rs: Rombauer (Chard) Rochioli (Pinot) Robert Sinskey (Pinot) RK

To: kolo55 who wrote (1954)	1/16/1999 12:01:00 PM
From: patroller	Respond to of 2542

Hi Paul has anyone heard this before. Top-tier CEMs take the checkered flag David T. Parrish; Advest Inc. Contract electronics manufacturers closed out 1998 on a high note. The Advest Contract Manufacturing Universe, an equally weighted stock index, rose 77% during the December quarter to finish the year up 25%. However, the gains were far more significant with the top-tier manufacturers in the group, such as Celestica, Flextronics, Jabil Circuit, SCI Systems, Sanmina, and Solectron. Shares of these CEMs rose an average of 85% during the year, while the remaining contract manufacturers were down an average of 11%. If we take it one step further and exclude two of the larger and better-positioned second-tier companies- Benchmark Electronics and Plexus-the average return falls to -38% for the year. The big question is why. Most major OEMs are seeking partners that satisfy several criteria: They want CEMs that can simultaneously produce the same product in different markets of the world at a competitive price; and have a large revenue base, so the placement of large programs won't represent an inordinate percentage of their revenue. They also want CEMs that have the financial strength, technological expertise, and depth of service to support their requirements today and in the future. These are some of the primary factors attributable to the success and appreciation of the top-tier manufacturers. This is not to suggest that the smaller, second-tier players are destined for failure; it's just that it's much more difficult for them to thrive. Second-tier players have to find a market niche they can protect. And market niche is not synonymous with low-to-medium volume, because we are seeing several larger CEMs expanding their offerings to address this segment of the market. The long-term prospects for the contract manufacturing industry are quite favorable. The now firmly established trend toward outsourcing and continued penetration of offshore markets should provide a solid foundation for strong earnings growth, with large CEMs being the greatest beneficiaries. However, given the aggressive assumptions we believe are factored into current valuations, we are moderately concerned about the potential for a slowdown in equipment spending as Y2K approaches. Copyright ® 1999 CMP Media patroller