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Electronics Production | December 10, 2004

Sanmina-SCI, 70% chance to keep IBM PC's

IBM recently announced a $1.75 billion sale of its PC business to China based Lenovo. IBM is currently Sanmina-SCI’s largest largest customer. According to Credit Suisse First Boston, Sanmina-SCI has a 70% chance of retaining its original manufacturing deal with IBM.
Sanmina-SCI's provides final-assembly services for IBM in markets where Lenovo has no presence and Sanmina-SCI has an existing relationship with Lenovo. One of the locations of the PC business will be in a location where Sanmina-SCI already builds PCs for IBM.

The worst case scenario for Sanmina-SCI would be to lose its business with IBM/Lenovo. Credit Suisse First Boston suggests that under this scenario revenue growth in 2006 would be cut by 60%.

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