Will electronics manufacturing service (EMS) companies make more money in 2001 than they did in 2000?

According to

Goldman Sachs

analyst Michael Zimm -- probably not.

"We now consider any EMS company having the potential to show positive earnings growth in calendar 2001 to be the rare exception rather than the rule," wrote Zimm in a note to investors from this morning. "Over the past ten days, five EMS companies have revised their outlook such that year-over-year earnings declines for 2001 appear unavoidable. For investors with time horizons measuring less than six to 12 months, we continue to believe that it is too early to initiate fresh long positions."

Zimm then reduced his earnings forecasts on

Act Manufacturing



Benchmark Electronics

(BHE) - Get Report



(CLS) - Get Report


C-Mac Industries




(FLEX) - Get Report



(SANM) - Get Report


Zimm also reduced estimates on


(PLXS) - Get Report

, which warned that profits would be impacted by the deadly combination of rising inventory and falling demand.

Robertson Stephens

only added to the burgeoning headache in the sector, lowering ratings on four companies. Celestica, Plexus,

SCI Systems

(SCI) - Get Report

and Flextronics were all downgraded to buy from strong buy by analyst J. Keith Dunne.

Yesterday, Plexus preannounced, joining




Jabil Circuits

(JBL) - Get Report

in warning about earnings going forward. Dunne, like many of his peers, said that near-term problems caused the downgrades. Visibility is low, demand is falling and inventories are not going away. But Dunne held out hope that once the economy picks up again, these EMS names would bounce back nicely.

"Given our new outlook and decreased visibility, we have less confidence in our near-term earnings estimates for the entire sector. However, we expect major new programs...to ramp into production in the second half of the year and believe these companies are well positioned to capitalize on improvement in end market conditions," he wrote.

A spate of analyst actions have been made to companies in the EMS sector lately. Two days ago,

Deutsche Banc Alex. Brown

cut Celestica's earnings forecast.

Merrill Lynch

cut seven companies a week ago.


covered the analyst actions and problems facing EMS companies in a

story from March 21.