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Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: solderman.com who wrote (4923)	2/6/1999 2:04:00 AM
From: patroller	Read Replies (1) \| Respond to of 6317

YOU ALL MIGHT LIKE CEMs holding on to momentum Darrell Dunn After closing 1998 as one of the best-performing markets in the electronics industry, contract electronics manufacturers are poised to finish 1999 with the same gusto. "We continue to see OEM divestitures driving the growth. If anything, [the December quarter] solidifies the 25%-growth outlook we're looking at for the year," said William Cage Jr., an analyst with J.C. Bradford & Co. Inc., Nashville, Tenn. Although a recession continues to plague the Far East, residual effects on the U.S. CEM industry have become less severe in recent months. And OEMs are beginning to increase orders with their CEM partners, according to analysts. In fact, analyst James Savage of San Francisco-based Thomas Weisel Partners LLC, said the continued acceleration of new outsourced manufacturing programs is as impressive as the record results reported by top-tier CEMs. "Not only are they doing well, but we're seeing war chests being created with companies like Solectron and Flextronics raising capital," Savage said. "They have money for additional acquisitions for the acceleration of growth they're anticipating over the next year." Results of the top-tier CEMs in the latest reporting period are particularly impressive, analysts noted. The good news started with Solectron Corp. and Jabil Circuit Inc., both of which posted strong double-digit gains in their fiscal quarters that ended in November; their sales in that period increased 71% and 40%, respectively. The momentum continued with December-quarter reports that included 70% revenue growth for Flextronics International Ltd., and 25% growth for Sanmina Corp. And it didn't stop there. New programs announced in January by the industry's two largest CEMs, Solectron and SCI Systems Inc., typified the growth analysts expect to continue throughout 1999. Huntsville, Ala.-based SCI announced an agreement to acquire a 210,000-sq.-ft. manufacturing operation in Kunshan, China, from a Hewlett-Packard Co. subsidiary, and signed new manufacturing contracts with Symbol Technologies Inc. and Silicon Graphics Inc. Meanwhile, Milpitas, Calif.-based Solectron last week finalized an agreement with IBM Corp. under which the CEM will become the exclusive maker of motherboards for the electronics industry giant's notebook PCs. As part of the agreement, Solectron will lease IBM's 405,000-sq.-ft. manufacturing operations in Austin, Texas, for the next three years, and will offer jobs to 1,300 IBM workers. These recent trends confirm that growth among the top-tier CEMs-those with annual revenue of more than $1 billion-will be greater than that of mid-tier players, according to analysts.