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

To: Marc who wrote (1972)	2/9/1999 6:48:00 PM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 2542

Marc or Anyone, Which ECM's if any are presenting at the Goldman Sachs Tech Conference?

To: Marc who wrote (1972)	3/16/1999 2:38:00 AM
From: kolo55	Read Replies (3) \| Respond to of 2542

In response to your post on the FLEX thread. I posted that I bought some FLEX a week ago Friday, and why: Message 8194883 You responded with this table of info: Message 8196478 Then Darkgreen posted: Message 8198378 This table contains many large errors and outdated info, I almost don't know where to begin. Further this analysis is based on some faulty key premises. (My apologies to thread veterans, but it looks like we have some rookies who haven't followed the discussion as it evolved over the last several years. I don't have a lot of time to spend on this, but I'd like to respond at least in part to the posts.) The market caps shown in your table don't include recent secondary offerings for Jabil and Celestica, and thus understates the actual market caps. Trailing 12 month revenues is a lousy metric for evaluating stock values in this sector, since big changes in revenues can occur due to new acquisitions and the big companies are growing 50% per year… what happened in several quarters almost a year ago doesn't mean much of anything in this environment. I've found forward PSRs helpful, but must be augmented with whether the company is getting high/low margin business. Yet margins alone, don't tell you everything. One of the best metrics was discussed in an article by Keith Dunne: Message 2965370 Compare this table with the other table (info taken from a recent analyst report): GrossMargin OperMargin NetMargin ROE ROA CLS 7.1 3.1 1.4 8.1 3.1 FLEX 8.9 4.6 3.1 17.7 6.1 SCI n/a 3.5 2.0 17.6 6.6 SLR 9.7 5.0 3.6 19.1 9.3 JBL 12.2 7.7 5.0 28.3 13.7 Certainly gives a different picture, doesn't it ? But even this doesn't tell the whole story, because what really will drive stock price appreciation is the growth of the company when they add new business, not just the performance of their existing businesses. From what I know, and I haven't done an in-depth analysis of Celestica, I'm not excited by their businesses. The IMSX acquisition wasn't a very good business, as reflected in the price, the workstation biz they bought in Colorado isn't a strong growth provider for HP, and the company's HQ and their biggest plant in Toronto doesn't seem to be located in a logical place for an EMS provider. From my limited look, Celestica seems to be good at acquiring a mishmash of businesses the others don't want. By comparison, the HP laserjet business acquired by Jabil was a gem at an incredible price. The purchase of Neutronics in Europe by Flextronics was a real coup. And if rumors of deals with Dell and Lucent pan out for Jabil, and if Lucent is the unamed new telecom customer for FLEX (along with six other new customers), the forward looking growth for these two is terrific. And major new deals have a bigger impact on these two, since they are still about 60% the size of Celestica. I think they can grow faster longer, before the growth trails off, just because their size is so big. Finally, I like the strategies evidenced by the management teams at Solectron, Jabil, and Flextronics. Solectron is one of the best managed companies in the world. Jabil has developed an competancy edge in some very fast growing technologies (note huge biz with Cisco), and Flextronics has set up a global system to be the best (and lowest total cost) producer in the world of portable and consumer electronic devices. They are all managed really well. If I can buy these guys at times at great prices, why mess with the others? Paul