Reality Check for EMS Stocks

And companies, like Celestica (CLS Quote), Solectron (SLR Quote) and Sanmina-SCI (SANM Quote), which have a larger presence in the high-end communications business (like routers and switches) have had a harder time recovering from the tech downturn and seem to be perpetually restructuring.

When Solectron reported its third-quarter results at the end of June, it said it planned further restructuring to boost profitability.

Investors in these companies have endured a lot of pain. As for Sanmina and Solectron, "their performance has been atrocious over the past few years," says Richard Stice, an equity analyst with Standard & Poor's.

As of Tuesday's close, Sanmina has tumbled 23.7%, Solectron is off 14.1% and Celestica has dropped 11% since the start of the year. Jabil has fallen 25.2%, while Plexus, which was on a spring tear -- topping $46 in May -- now trades at $24.36. Meanwhile, Benchmark Electronics(BHE Quote) is up 10.6%, and Flextronics has grown 13.6% since the beginning of 2006.

Cisco's(CSCO Quote) good performance in the latest quarter, which helped lift the Nasdaq, should help provide stable revenue for Celestica and Solectron, which count the networking giant among their largest customers. Still, analysts say the constant restructuring activity is a more pressing issue.

Adding to its woes, Sanmina is under investigation by the Securities and Exchange Commission and recently received a delisting warning from Nasdaq because it failed to meet a deadline to file its most recent 10-Q.