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TWST: Give us an idea of what you are covering in this EMS space. Is
that still the proper term?
Mr. Severson: Yes, it's electronic manufacturing services and it
encompasses basically seven larger domestic EMS companies. They comprise
the largest portion of the public market. Those seven are Flextronics
(FLEX), Jabil (JBL), Solectron (SLR), Sanmina-SCI (SANM), Celestica
(CLS), Benchmark (BHE) and Plexus (PLXS), and then there are some other
smaller companies in the space that we do not cover currently. There's
also a large Taiwanese company, Hon Hai (trade name Foxconn) that we
also do not cover, but it is definitely a factor. TWST: What's going on in the space from a business perspective at this
juncture?
Mr. Severson: Business has actually started to stabilize and improve.
The end markets are the place to start and across many segments we have
seen a mild recovery including IT, telecom, and consumer. The end
markets have stopped eroding for most of the EMS companies, which brings
us to the next factor and the most important one, which is what is
happening on the outsourcing front. This is where you are going to drive
growth above and beyond the low single-digit levels of the end markets.
We would note that there have also been some significant additions as to
where that incremental outsourcing growth is coming from. There has been
a history of large outsourcing deals coming from traditional areas of IT
and telecom, but in the last 18 months we've seen a number of deals
being done in what we define as non-traditional markets such as medical,
industrial, aerospace and automotive. These areas have been driving
solid growth, especially for Jabil, which has posted the best
performance in the group.
Tickers included in this excerpt: BHE, CLS, F, FLEX, JBL, PLXS, SANM, SLR
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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