Industry Pulse - Sep '06

* Flextronics recently announced the Company is acquiring small form factor display maker, International Displayworks, Inc. The move will allow Flextronics to offer a more integrated solution that adds LCD modules to its current camera module, TV tuner, and Wi-Fi capabilities. The Company is gaining traction with its vertical model and is also being added as a third supplier for Juniper Networks.

* Foxconn announced recent solid financial performance. Company long-term secular growth remains attractive. Earnings per share are up 95% y/y and 18% q/q. Some of the changes happening with the Company include an increase in R&D spending and a product mix shift to include more lower-margin game consoles.

* PCB manufacturer TTM's recent acquisition of Tyco's PCB operation makes TTM the single largest military supplier of printed circuit boards. The move also causes no customer overlap for TTM.

* Bear Stearns recently announced seeing a buildup trend in inventories in the industry. Findings indicate EMS inventory days and inventory/sales of 51% and 13.2% respectively are the highest since March 2002. A concern Bear points to is the buildup is ahead of anticipated decelerating growth. One perspective supported by discussions among those in industry is some OEMs are convincing their EMS partners to carry more inventory to satisfy any potential upsides, without having to pay for the convenience. Holding this excess inventory could hurt near-term financial performance metrics for certain EMS companies.

VentureOutsource.com, August 2006