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NEW YORK – The low valuations of several big-name EMS firms suggests impending restructuring, an industry analyst said yesterday.

Celestica, Sanmina-SCI and Benchmark are all below historical norms and tangible book value, noted Sherri Scribner of Deutsche Bank Equity Research in a research note. This means Wall Street expects those companies will reduce overhead in the coming months.

“[T]rading below tangible book value suggests to us that the market expects some form of restructuring at these companies,” Scribner wrote. Sanmina-SCI and Celestica are trading below their cash values, she added.

While Sanmina-SCI’s profitability has increased measurably over the past year, the company is saddled with a 55% debt-to-capital ratio and high interest rates. The company carries $1.48 billion in debt, though none of it is due before June 2010, against $1.482 billion in cash and credit lines.

As of June, Celestica had $759 million in debt and $1.2 billion in cash and short-term investments.

Benchmark had $12 million in debt due in December 2012, and $289 million in cash and short-term investments, plus a credit line of $100 million.

Plexus had a $150 million loan due in 2013. It is the only significant debt the company carries. Plexus has more than $200 million cash on hand.

Flextronics actually carried more debt – $3.79 billion – than its competitors, but just $200 million is due before 2012, and the world’s second-largest EMS company had $1.77 billion in cash and short-term investments and more than $2 billion in credit lines available.

EL SEGUNDO, CA – EMS and ODM firms will continue to grow, albeit at a slower rate, during the current recession, says research firm iSuppli.

In fact, the firm believes, a recessionary environment may offer opportunities, pointing to the 2001-2003 recession, when a “rubber band effect” stimulated significant revenue growth for EMS/ODM firms emerging from the downturn. Top ODMs increased their annual sales from $12 billion to $37 billion during 2001-2004, while EMS providers had a CAGR of 11% during the period.

This same effect may apply this time around, as OEMs refocus resources on core competencies, investigate ways to minimize costs and shore up their balance sheets, says Adam Pick, principal analyst for EMS/ODM at iSuppli.

He and senior analyst for EMS/ODM services Jeffrey Wu will discuss how the deteriorating macroeconomic situation is impacting contract manufacturers in an Oct. 22 Webinar at 11:30 am EST.

For more information and registration, visit https://www1.gotomeeting.com/register/676924336.

ARLINGTON, VA – Nearly 70% of electronics companies surveyed for a just-released Consumer Electronics Association study are actively recycling their products.

The trade group today announced the results of its first industry-wide consumer electronics environmental sustainability report. The report, Environmental Sustainability and Innovation in the Consumer Electronics Industry analyzes the progress of 64 companies toward greater environmental sustainability. The study assesses industry progress in adopting sustainable policies, practices and programs and highlights specific environmental accomplishments by leaders in the consumer electronics industry. It was conducted by research firm Technology Forecasters Inc.

“This study demonstrates the industry’s commitment to environmental sustainability through eco-design, energy efficiency, green manufacturing and electronics recycling,” said Gary Shapiro, president and CEO of CEA, in a press relesase. “We are proud of our accomplishments thus far, but there is still work to be done. We look forward to the day the consumer electronics industry fully achieves our collective environmental sustainability goals.”

Highlights of the study include:

Decreased electricity use: Among companies that reported reduced electricity consumption, electricity usage declined by as much as 25% during the past three to four years.
Relative greenhouse gas reduction: Among the major CE companies that reported greenhouse gas emissions from 2004-2007, seven of the 10 have achieved a reduction per $1 million in revenue.
Strong recycling commitment: Among 64 electronics companies surveyed, 69% report they are actively recycling electronic products and components, and 38% report reuse of the electronics products they make or use. Together, these actions have helped to recycle nearly 800,000 tons of electronic waste.
Improved energy efficiency: Continuous improvement across the industry in nearly every product. The widespread shift from CRT to LCD monitors that occurred earlier this decade reduced average energy use per monitor by about 30%.

This report covers the sustainable practices chain from the internal processes of the CE companies to manufactured end products. The report observes how improved designs have enabled the production of products that require less packaging, contain fewer harmful chemicals and allow for increased usability, recycling, and energy conservation. The report also examines companies’ adoption of lean manufacturing processes, the greening of manufacturing facilities, and improved supply chain practices. Through improved efficiencies and significant resource conservation, these practices have played an integral role in limiting waste. Researchers also noted successful community and environmental outreach programs initiated and maintained by CE companies, another critical piece of the sustainability puzzle.

“We’re confident that the industry that brought us such vital technologies as computers and mobile phones can also have a positive impact on the environment,” said Parker Brugge, CEA’s vice president of environmental affairs and industry sustainability. “CEA is committed to providing the resources to support industry efforts toward environmental sustainability.”

The full report is available at www.CE.org/green.

ARLINGTON, VA – Consumer spending on electronics will grow 3.5% in the fourth quarter, down 50% year-over-year, the Consumer Electronics Association revealed in a report set to be released today.

ROCKVILLE, MD – Rochester Electronics has established a Design and Technology Group here, expanding its capability to recreate semiconductors discontinued by the original manufacturer.

The new group specializes in ASIC designs and can reverse-engineer products where original tooling and intellectual property is missing or unavailable. Rochester has licensing deals in place with original component manufacturers to support these activities, the company says.

"There are many devices discontinued by the original manufacturer that are critically required in systems needing a long term support solution. In many cases, there simply is insufficient inventory of finished devices or die," said Curt Gerrish, Rochester founder and CEO. "Through Rochester's authorizations and licensing from the original manufacturer, we are able to recreate the device from the manufacturer's IP or through device reverse engineering."

DANDERYD, SWEDEN – Top 50 EMS firm NOTE will cut headcount by 100 workers in Sweden and move certain production to its China plants.

ST. LOUIS – EMS provider LaBarge Inc. today said the company expects to report net sales of approximately $68 million for the fiscal 2009 first quarter, up nearly 13% year-over-year.

“Fiscal 2009 first-quarter results were up significantly from the previous first quarter on higher shipments to customers in several market sectors and improved gross margin,” said Craig LaBarge, CEO and president.

The firm plans to announce full financial results on Oct. 30.

LaBarge is a top 60 EMS company.

Tags: SMT, surface mount, electronics, contract assembly, electronics manufacturing services

SAN FRANCISCO – A Webinar on on how article manufacturers can comply with REACH requirements is coming Oct. 29.

While the majority of products, known as articles under REACH, will be exempt from registration, all articles imported into or manufactured and sold in the EU will be subject to disclosure requirements for certain substances that could be used in articles, says Design Chain Associates. These disclosure requirements are expected to begin this week or next.

Manufacturers producing for consumer markets should be especially concerned about these requirements since REACH permits any consumer to request information about certain substances in articles from any manufacturer, says the firm. The manufacturer is obligated to reply within 45 days.

DCA's 90-minute Webinar will address REACH concepts and timelines; what an article is; legal requirements for articles; candidate list for substances of very high concern, and related issues; what to do now to comply with REACH; ongoing issues and strategies to ensure continued compliance with REACH; strategies to prepare more broadly for environmental compliance and competition.

Visit http://www.reacheu.com for more information and to register.

MILTON, NY -- Sono-Tek's August quarter sales rose 13% year-over-year to $1.61 million but the company swung to a net loss of $177,000.

For the period ended Aug. 31, the Company reversed its previous year's profits of $12,000, citing increased spending on technical and market developments for a new business development program.

Chairman and CEO Dr. Christopher L. Coccio attributed the increase to the new business development program, and noted that the sales increase was based on products such as the Exactacoat and Flexicoat, which serve the new solar and fuel cell markets, WideTrack systems for new glass customers and our first textile finishing system, and the new line of SonoDry ultrasonic spray dryers for the pharmaceutical and nanotechnology industries.

SAN JOSE -- North American manufacturers of semiconductor equipment booked $754 million in orders in September 2008 on a three-month average basis, down 13% from revised August figures and off 39% year-over-year.

The book-to-bill ratio was 0.76, meaning $76 worth of orders were received for every $100 of product billed for the month, SEMI said.

NASHVILLE -- Sean McShefferty, a veteran of more than 20 years in electronics manufacturing and North American electronics sales manager at Kyzen, died Oct. 12 following a long battle with cancer.

In a statement, Kyzen vice president Tom Forsythe said, “It is with deep sorrow that we received word of Sean McShefferty’s passing. Sean has battled stomach cancer for nearly two years and until quite recently had remarkably maintained a near-normal schedule, not only managing to continue with his duties at Kyzen but also being active at his church, in outreach programs for cancer awareness, as well as supporting other cancer patients and survivors.

SILVER SPRING, MD – The International Electronics Manufacturing Initiative is offering a medical electronics forum on Nov. 14 in Silver Spring, MD.

This free event, hosted by the US Food and Drug Administration, will discuss requirements and recommendations developed for the electronics industry to ensure reliability of components used in medical products.

Forum topics include existing and related standards and test methods; use conditions for life-critical medical components; test and extrapolation methodologies; sampling population assessment; range and conditions of applicability; test methodologies and criteria; medical grade guidelines; failure modes and effects analysis of MLCC failures, and accelerated life test methods to determine long-term leakage and breakdown failures of MLCCs.