* Solectron’s improvements in working capital and cash flow over the past few quarters could likely be due to declining sales. Recent negative operating cash flow is being attributed to a higher capex and monies directed toward a share buyback. Meanwhile, the Company has shown some notable improvements in customer program management activity as presented in Venture Outsource’s December online seminar, ‘Global EMS Providers – strengths, challenges, tactics & value propositions’.
* MiTAC will likely maintain its market share of ~32% of the global GPS market through 2006. VO believes better Company economies of scale and improving overall product mix toward handsets and pure navigation devices will help offset margin pressures for GPS. North America is likely to be the next growth driver for global GPS demand as interest in tourism and sound mapping systems increases.
* Benchmark’s no-debt, cash positive position is rare in the EMS industry for companies its size. The use of its cash (~$320 million) has been the topic of speculation. Recent disclosures indicate the Company is more likely inclined to consider acquisitions and possibly a stock buyback over cash dividend and LBO considerations.
* Sanmina-SCI announced it will close its Greenock, Scotland plant which will impact 300 employees as production is transferred to Hungary. The Company remains burdened regarding manufacturing positioning with ~60% still in high-cost locations.
VentureOutsource.com, January 2006
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