Sanmina-SCI Corp. (SANM) JP Morgan Global Technology Media and Telecom Conference May 15, 2012, 1:30 p.m. ET Executives Bob Eulau – Chief Financial Officer Analysts Mark Strauss – JPMorgan Presentation Mark Strauss
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So we think we’ve got a pretty diverse set of manufacturing services that we can offer, coupled with components and products that are unique in the industry. We focus on vertical markets that you might expect given our high mix emphasis. One area that’s about 45, 50% of the company is communications, and within communications we have, we do extensive work in the wireless base station area. We also do a fair amount of optical; I would say among the Tier 1 EMS companies, we have the largest optical footprint.We also focus on another segment, which we call medical, defense and industrial, which for us is very strategic. Those often times are programs that are suited to our capabilities, where we can add more value due to the complexity and the engineering content. We then have another segment, which we call enterprise computing and storage, where we are, as the name implies, focused on computing solutions, and increasingly over the past few years, putting more emphasis on the storage side, which is going reasonably well. And then finally, we have a multimedia business which, the largest portion of which is set top boxes, but also includes automotive, which has done well in the last few years, and includes other areas we’ve been diversifying into, including high-end cinematography and areas like casino gaming consoles, any area where we can continue to diversify and has multimedia aspects. Question-and-Answer Session Mark Strauss Okay. So you spoke on your last earnings call, and I think the consensus estimates that are out there are looking for a pretty strong uptick in the back half of this year. What’s driving that? Is that coming from a particular end market, or what kind of visibility do you have into that? Bob Eulau Yes, so one of the things that we’ve seen for a while is the second half of the calendar year looks like it’s going to be quite a bit stronger than the first half, and we’ve mentioned that actually in our last two earnings calls. What happens with us is we get a rolling 12-month forecast from our customers, so we have a sense of what they’re expecting to happen in terms of new product introductions, in terms of volumes, et cetera. And what we do is try to transparently provide that to our investment community, and we’ve seen this trend for a while. We’ve also had a challenging last six months, largely due to communications, so we’ve had a period of, I would say sluggishness and even decline on the communications side. We’re expecting in the second half of the calendar year that that situation will get quite a bit better, and barring any new surprises, that’s the way the forecasts look.
Mark StraussOkay. So I think that kind of explains communications, but can you maybe go into your other vertical areas and talk about the last six months, the last year or so, and then the outlook? Bob Eulau Yes, I can. So, in terms of medical, defense and industrial, as I mentioned, a very strategic area for us. From a defense standpoint, we had a step down in that business last year, actually around this time, and now it has stabilized, it continues to be a very profitable business for us, and we’ve got a new leadership team there. We’re optimistic that we should be able to start to see some modest pick-up on the defense side. Medical is also an important area for us. We focus primarily on larger products, so it’ll be CT scan machines, MRI machines, X-ray machines. It’s a segment in which we can do more vertical integration. We, as I mentioned, have mechanical capability, so we can apply that to a variety of the segments, but particularly in medical. And we see medical as a steady area. There obviously are significant steps you have to take to get qualified to build product in that segment, and we think we’re very well-suited. I’d say that area will be relatively stable, maybe slightly up in the second half. Read the rest of this transcript for free on seekingalpha.com