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Three analysts and top management from nine sector firms examine the Electronic Supply Chain sector in this special 53-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info415.htm

TWST: Mark, what has gone on in the group over the past year? I guess we’ve gone from euphoria to despair. Would that be appropriate?

Mr. Hassenberg: That might be optimistic. I’ve been doing this for a long time and Jerry has as well, and I’ve never seen nor have I met anybody who’s been in the industry who has ever seen things change as rapidly as we’ve seen in this cycle. You went from scrambling to try to find product to wondering what to do with it in a matter of months. And the breadth, the magnitude, the speed of the decline has taken everybody by surprise.

TWST: Mark, we’ve heard a lot of talk about the inventory problems of the industry. Is it still as bad?

Mr. Hassenberg: No, I think it’s getting better. There is certainly a lot of excess inventory, but I think what we’re seeing today are the kind of things that you have to see to prepare for the recovery. I don’t think anybody here wants to give you the date a recovery will begin, but the things that have to occur before a recovery starts are happening. Certainly there was a big change in inventories in the June quarter versus what happened in December. It’s getting better; you’re seeing fewer cancellations, fewer stretch-outs. We are seeing orders come in on products that does not necessarily reflect an increase in end demand, but inventories being absorbed. We’re getting ready for the pickup, but we still don’t know how long it will be before it really takes off.

TWST: Is there still excess production capacity?

Mr. Hassenberg: Something I think has been missed, or maybe I hope it has been missed, is that this upturn in capacity for the capacitor companies was very short-lived. Even though business was very strong in the fourth quarter in 1999, companies thought it was Y2K-related and didn’t start scrambling for capacity until early 2000 — one of the reasons we had all these shortages. The industry started to pull back by August or September because the back-to-school season in PCs didn’t materialize. If you compare this period of capacity addition to what happened in 1991-1995, it’s relatively small. I think when demand picks up we’ll be surprised at how quickly things tighten again; the question is when that is going to happen.

TWST: Mark, are there any other areas in this whole supply chain that we should be looking at?

Mr. Hassenberg: My favorite stock in that group is Sanmina (Nasdaq:SANM), an EMS company, but it has a very strong presence in the printed circuit board industry, particularly at the very high end of that market. The company has done an outstanding job in reducing its cost structure dramatically from the end of December to the end of June. Also, the acquisition of SCI (NYSE:SCI) will bring in demand that is currently being purchased outside by SCI. So with their new cost structure, with their high-end focus, with layer counts and complexity increasing and incremental volume coming in from SCI, I think people will be surprised by the incremental profitability that Sanmina will enjoy when the industry picks up.

This special issue includes:

1) Electronic Supply Chain - In an in-depth (7,400 words) Analyst Roundtable, Eric Gomberg, Vice President at Thomas Weisel Partners, Mark Hassenberg, Managing Director at Credit Suisse First Boston and Jerry Labowitz, Heads a team that covers Electronics Manufacturing Services at Merrill Lynch Global Securities, examine the outlook for the sector including, inventory problems, excess production capacity and share specific stock recommendations.

2) CEO and Sponsored interviews (average 2,500 words). Top management of nine sector firms examine the outlook for their firm and the sector.