Hardware & PCs
And then there were four. SCI Systems' (SCI - Cramer's Take - Stockpickr) decision Monday to be acquired by fellow contract electronics manufacturer Sanmina (SANM - Cramer's Take - Stockpickr) for $4.1 billion in stock catapults the companies into the ever-shrinking big league of contract manufacturing. The deal probably won't do much to turn either company's flagging stock around in the short term. But in the long run, most observers are seeing it as an important move to gain crucial size and diversification. Sanmina claims that the combined company will have sales above $14 billion and 100 plants around the world. That puts it in the same league as a triad of massive electronics manufacturing services, or EMS, companies: Solectron (SLR - Cramer's Take - Stockpickr), Flextronics (FLEX - Cramer's Take - Stockpickr) and Celestica (CLS - Cramer's Take - Stockpickr). That's key for Sanmina and SCI Systems. In the world of contract manufacturing, where the competition often shakes out according to whether companies have the capacity to handle the largest and most profitable outsourcing deals, size matters quite a bit.
| Four on the Floor | ||
| Company | Manufacturing Capacity | 2000 Sales |
| Solectron (SLR:NYSE) | 15.7 million sq. ft. | $14.1 billion |
| Sanmina/SCI Systems | 12.1 million sq. ft. | $12.3 billion |
| Flextronics (FLEX:Nasdaq) | 12.6 million sq. ft. | $12.1 billion |
| Celestica (CLS:Nasdaq) | 5.3 million sq. ft. | $9.7 billion |
| Source: Lehman Brothers, the Companies | ||
| Calling EMS |
| |
| Contract Killing |
| |
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