Stocks quoted in this article:
This morning's announcement by Ericsson (ERICY – 11-1/8) that they will transfer production of their handsets to Flextronics (FLEX – 38-1/4) has not had the impact on FLEX shares that one might expect. This is a great opportunity for FLEX, but they also announced that they would offer 25-million additional shares in order to fund the enterprise. So the boost in share price may be longer term rather than immediate.
A whopping 3,280 contracts of the FLEX February 37-1/2 call have changed hands today. There were five block trades of 400-500 shares each that traded alternatively at the bid, ask, and in-between the two prices.
Today's alliance again highlights the group of companies that produce electronic
manufacturing services (EMS) for original equipment manufacturers (OEMs). Others in the group have stated that, although sales have slipped in the computer and telecommunications groups they manufacture for, they are being turned to increasingly for outsourcing. It is estimated that presently about 13-percent of electronics products are actually made by these contract manufacturers. That figure is expected to double by 2004.
Other companies in this space include Sanmina (SANM – 49-1/8), Jabil Circuit (JBL – 36-1/2), Celestica (CLS – 66-9/16), Solectron (SLR – 39.17), and SCI Systems (SCI – 27-3/16). Most of these companies have experienced a huge rally in their share prices this month. Today, SANM announced its offer to purchase a Swedish electronics producer.