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Technology Stocks : Flextronics International (FLEX) -- Ignore unavailable to you. Want to Upgrade?

To: Ron Kory who wrote (1063)	3/7/1999 3:55:00 PM
From: patroller	Respond to of 1422

Buy em both .patroller MS readies hoard for outsourcing blitz J. Keith Dunne; BancBoston Robertson Stephens Recently, the Electronic Manufacturing Services (EMS) industry has been restructuring its balance sheet and building a war chest to capitalize on an expected acceleration in outsourcing. In early December, Flextronics International Ltd. raised $194 million in new equity, followed by a $700 million offering of convertible senior notes by Solectron Corp. Currently, Jabil Circuit Inc. and Celestica Inc. are in the market to raise more than $200 million and $225 million in new equity, respectively. Additionally, The DII Group Inc. converted $86 million in convertible notes; Solectron has announced intentions to convert $230 million of convertible notes; and SCI Systems Inc. is expected to call $287 million in outstanding convertible notes in May. These actions should add more than $1.2 billion in equity to the industry, and sufficiently fund internal growth and OEM asset divestitures to support in excess of $5 billion in sales. The momentum for this growth is becoming more apparent. At our recent technology conference, one EMS management team suggested that additional outsourcing within the telecommunications industry could total $50 billion to $60 billion in sales. Another management team was more specific, indicating potential OEM divestitures in the next few years could total more than $45 billion in sales for just the following eight OEMs: Alcatel, Hewlett-Packard, IBM, Lucent, Motorola, Nokia, Philips, and Siemens. The opportunity is tremendous, as the need to streamline the supply channel overtakes the OEM industry, leading to increased outsourcing. Streamlining, in many cases, has taken shape as a merger or acquisition. Last year, 68 mergers and acquisitions occurred in the EMS industry, significantly more than the 50 or so deals in 1997. Of these transactions, 21 involved OEM asset divestitures, an increase of 62% over the prior year. In 1999, the total number of acquisitions could reach 100. In addition to OEM asset-integration opportunities, we expect EMS companies to complete acquisitions that expand their geographic presence and add new products and services. Copyright ® 1999 CMP Media Inc.

To: Ron Kory who wrote (1063)	3/7/1999 5:30:00 PM
From: kolo55	Read Replies (4) \| Respond to of 1422

I was thinking of buying some more JBL. Then FLEX dropped, and JBL bounced, so on Friday morning I picked up some FLEX at just above 33. FLEX is trading at a significant discrepancy to JBL, and SLR valuations, and should trade to at least at 30% higher than CLS ( IMO 40-50% higher, since they have better businesses and customers- the recently acquired IMSX business is risky and should be valued lower). Here are analyst estimates for the next several quarters, and the current stock prices: Actual Current DecQ MarQ JunQ Stock Price FLEX 0.34 0.32 0.35 34.00 NovQ FebQ MayQ JBL 0.25 0.25 0.29 33.50 NovQ FebQ MayQ SLR 0.26 0.26 0.29 42.81 DecQ MarQ JunQ CLS 0.27 0.24 0.28 27.12 Interesting to see the seasonality in the estimates... it is possible the seasonal decline/leveling in revenues and earnings may be offset by the ramps of new programs. Solectron valuation sticks out like a sore thumb, but they're getting the big cap premium the market seems to be handing out these days. (Some day, I think all these stocks will get the big cap premium.) By my analysis, I like FLEX the best at these current values. Thats why I think the correction for FLEX may be over now, and almost certainly will end if SLR and JBL report good quarters with good forward looking information on March 15/16. FLEX will follow the sector higher, and if we eventually hear about some telecom deals, I think they will get their fair share, and should trade higher. Some day, I think FLEX should get to a 20% premium to SLR stock price, based on the higher earnings stream per share, not to mention a potentially higher growth rate from a smaller revenue base. That would put FLEX at 50 compared to SLR's current price of 42. This was enough discrepancy for me to pick up some FLEX shares. Paul