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Electronics Production | August 01, 2007

"Flextronics will do well in<br>a weaker EMS Market"

Zacks Technology analyst Steve Biggs explains why he is keeping his Hold recommendation on shares of Flextronics. He believes that the industry revenue growth is stagnating and consolidation will continue for the foreseeable future.
After the acquisition with Solectron, Biggs believes that Flextronics will be a consolidator of the EMS industry given its relatively strong competitive position and size. He believes that the industry revenue growth is stagnating and consolidation will continue for the foreseeable future.

The Zacks analyst is negative on the industry as a whole, however they rate Flextronics' stock a Hold given its leadership position.

With continued weakness in residential real estate, the consumer business is likely to remain weak, which could pose a risk for Flextronics as 20% of its revenue currently comes from the consumer business.

Europe has demonstrated weakness for the past year, but is the only region showing year-over-year declines for Flextronics. Further, in the ODM market, competition is intensifying rapidly.

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