News
NEW YORK, Aug. 24 - A majority of U.S. business and IT executives anticipate increases in IT expenditures over the next three years, according to results of a survey released today by Accenture.
The study, which queried more than 300 general business managers and IT executives of large U.S.-based companies, found that 55% of respondents expect their organizations to increase their IT expenditures over the next three years, with only 10% expecting decreased spending.
In addition, of the 84% of respondents who indicated that productivity at their companies had increased over the past several years, most identified IT-related factors as key to that increase. Specifically, 83% cited "better use of technology" and 65% selected "the right amount of investment in technology."
However, the survey identified several areas where the business managers were disappointed in the effectiveness and impact of IT. Most notably, 47% of business managers and 51% of IT executives said their companies did not know how to make their technology organizations accountable for delivering real business value. In addition, 52% of the business managers said that IT is underdelivering relative to what their companies spend.
The results are based on an online survey conducted in June and July. A total of 302 executives were surveyed at U.S. companies with more than 5,000 employees and median annual revenue of $10 billion.
North American-based semi tool makers posted $1.61 billion in orders in July, using a three-month average basis, the trade group SEMI said today. Bookings were even with revised June numbers and 128% ahead of a year ago.
A book-to-bill of 1.05 means that $105 worth of orders were received for every $100 of product billed for the month.
The July 90-day average of worldwide billings was $1.54 billion, up 2% over revised June levels and 96% ahead of last year.
"Bookings have increased sequentially for eleven months and are at the highest point since early 2001," said Stanley T. Myers, president and CEO of SEMI. "The bookings and billings values for North American-based equipment companies have stabilized at high levels and support our global billings outlook for the second highest revenue year on record for our industry."
The EMS maker is offering what it calls its Green Services to OEMs seeking to comply with pending environmental initiatives, including the Restriction of Hazardous Substances legislation, which will require the removal of a number of hazardous substances, including lead, from electronics components by July 1, 2006.
Depending on they type products they design, OEMs will go through the transition in stages, Celestica general manager of engineering services Dan Henes observes. "There's a suite of [stages] that each customer will have to go through. Some will go through [these stages] themselves, some will need help."
In a phone interview with Circuits Assembly, Henes said that Celestica can offer either "point" services - specific solutions to specific problems, for example, help with certain design problems - or an end-to-end solution. "By breaking this into bite-sized pieces, customers can move at their own pace. They need to conduct an assessment of their designs and materials are in terms of compliance. We can do that BOM/risk analysis for them."
Among the services offered are consulting services, turnkey product conversion and technology qualification.
Henes noted that companies like Celestica, which directly handles designs from OEMs and buys materials from vendors, are best-positioned to help the supply chain navigate through the dizzying maze of lead-free alternatives and paperwork. "There's the synchronization of design, manufacturing processes and the component supply base. Some customers are struggling with, who's doing what in the supply base? We're probably in the best position to navigate that."
As evidence, Henes points to obscured effects of the lead-free conversion, which he believes EMS firms are attuned to. "You may have a product today that has 100 parts. Half meet lead-free legislation, and require no banned substitutes. The design and supplier [of those parts] say, 'We don't have to do anything for those.' But you need [lead-free] solder, which requires higher processing temperatures, and now you have to go back and qualify these new redesigned parts and put them side-by-side with the components that the OEM thought were OK. It's not because of lead conversion, but the temperature extremes that are a side effect of the conversion
The transition, Henes says, is like a "massive industry engineering change." He asserts that for a Tier 1 EMS provider like Celestica, "this is what we do for a living."
According to Celestica, the company has been working on environmental compliance issues since 1999. Consortia work to date has included building lead-free boards to support the High Density Packaging Users Group's lead-free programs; sponsoring and directing the Centre for Microelectronics Assembly and Packaging's lead-free development activities for Canadian universities, and leading a NEMI program on the assembly and reworkability of lead-free solder joints.
SIOUX FALLS, SD, Aug. 19 -- Raven Industries reported second-quarter net income climbed 15% to a record $3.6 million. For the quarter ended July 31, the company reported revenues were up 3% to $37.1 million.
For the first half, Raven reported net earnings up 23% to $9.1 million, and sales up 3% to $75.5 million.
"Our second quarter was budgeted to be our toughest, with earnings projected to be flat or slightly down," president and CEO Ronald Moquist said. "[T]hree of our four operations performed beautifully. We could have done even better except for the weak performance of our Electronic Systems Division." The ESD group provides EMS services.
ESD's sales were up, but less than 1%, to $11.7 million. Operating profit dropped 52% to $773,000. The division struggled with start-up problems with a new customer and continuing material supplier issues. As a result, shipments were delayed and inventory levels increased substantially, management noted. For the first half, sales of $20.8 million were down 4% and operating income of $1.5 million was 46% lower than last year.
Moquist said the full-year outlook continued to appear strong and that production problems will be ironed out in the third quarter. "We believe the positive trends set in the first half will continue to help drive sales and earnings growth through the second half of this year."
SAN JOSE and NORTHFIELD, MN, Aug. 16 -- The PCB division of Flextronics will acquire one the oldest and largest makers of flex circuits in North America in a stock-for-stock deal. The acquisition is expected to increase Flextronics' annual revenues by $80 million.
Multek, a wholly owned division of Flextronics, will acquire Sheldahl, a leading provider of flexible interconnect products and electronic materials. The deal is expected to close at the end of August.
Founded in 1955 and publicly traded until emerging from bankruptcy in 2002, Sheldahl employs 450 and has facilities in Northfield, the Philippines and Mexico. It is owned primarily by Ampersand Venture Capital, Molex Inc. and Morgenthaler Partners.
Multek manufactures rigid printed circuit boards.
In a statement, Sheldahl president and CEO Benoit Pouliquen said, "This acquisition will strengthen our position as an industry leader in flexible interconnect and materials technologies and provide access to Multek's key resources and geographies, such as China."
TORONTO, Aug. 12 -- EMS provider Adeptron Technologies reported revenues of C$9.6 million for its June quarter, up from C$6 million sequentially and C$3.6 million last year.
About C$3 million came from sales from its Ottawa operations, which Adeptron acquired last quarter.
Gross margin was C$1 million, up C$900,000 from the first quarter and C$300,000 last year.
F. Michael Marti, President and CEO of Adeptron, attributed the improvement to stronger pricing and improved currency exchange rates.
SG&A expenses were C$1.4 million, or 14% of sales, down from 22% of sales sequentially and 20% last year.
"Adeptron's revenues and gross margins are increasing at a more dramatic rate than SG&A," said Marti.
Adjusted net earnings were C$58,090, vs. adjusted net losses of C$509,128 last quarter and C$23,414 last year. The GAAP net loss was C$600,000 ($0.02 per share), compared to C$1.1 million last quarter and C$500,000 in Q2 2003.
"Although we expect that the incremental growth rate in revenues for the rest of the year will be less dramatic ... we anticipate that quarterly revenue run rate will continue to build from Q2 levels," Marti said.
SAN FRANCISCO, Aug. 18 -- Cautious forecasts and rising inventories at blue-chip electronics OEMs are reinforcing analyst views that the tech cycle growth is slowing.
In its weekly EMS Edge newsletter, Deutsche Bank said, "Although anecdotes from Dell, Cisco and Hewlett-Packard were not entirely consistent, commentary regarding near-term demand was relatively cautious in aggregate."
Furthermore, recent news from major Asian ODMs has been concerning. "Venture, Hon Hai and Compal all reported softer near-term sales, suggesting production trends are decelerating," wrote Chris Whitmore, an analyst in DB's equity research group. Hon Hai and Compal both reported growth but results fell below earlier guidance. Venture's second-quarter sales dropped 2% sequentially.
Cisco also guided for lower sequential growth and HP said demand slowed in July. Plus, both HP and Cisco reported lower inventory turns and higher inventories during the quarter.
"We remain concerned that the combination of growing inventories across the supply chain and slowing end-market growth will pressure earnings growth" for EMS firms, DB said. The firm believes growth rates peaked in the second and third quarters, and "the recent inventory build will result in disappointing second half 2004 and 2005 build rates for the EMS industry."
The new division, AIM Semiconductor Packaging Materials, will also supply touch-up materials and thermal interface materials, the company said in a statement.
Tamura FA System Corp. will market Speedline's Accuflex and AP Excel stencil printers under the MPM/Tamura brand, and provide service and support to Japanese customers.
"As the market leader for reflow and wave soldering equipment in Japan, Tamura's highly skilled staff understands the challenges manufacturers face throughout the assembly production process," said Pierre de Villeméjane, president and CEO of Speedline, in a press statement.
Tamura will translate software and manuals into Japanese and develop additional features specific for its Japanese customers, Tamura said.
The maker of telecom and networking gear forecast sales would be flat to up 2% sequentially, and year-on-year growth would slow to 16 to 18%.
For the just completed July quarter, router demand rose 12% sequentially and switches were up 3%. However, the company's ratio of inventories to cost-of-goods-sold (COGS) climbed sequentially, and turns dropped to 6.2, from 6.3.
In a research note published today, Deutsche Bank warned that climbing inventories among OEMs of communications equipment could shake the recovery of the EMS sector. "EMS production rates of communications gear has increased 15% since the Nov./Dec. quarter (normally flat to down 10%). We believe this is largely a result of building inventories at Cisco and other [communications] OEMs (Lucent, Ericsson, Motorola)."
Cisco buys about $4 billion worth of goods and services from North American top tier EMS vendors, according to DB, making it one of the largest EMS customers. Major suppliers to Cisco include Celestica (about 10% of revenue), Solectron (13%) and Jabil (about 15%).
"Cisco`s slowing sales growth and inventory build reinforces our
view that the peak of the current tech cycle is near," DB analyst Chris
Whitemore wrote.
Weymouth, UK - Aug. 4, 2004 - DEK (dek.com)'s latest machine for surface-mount pre-placement, the Europa, has a cycle time of less than seven seconds and total process Cpk 2.0 of ± 20mm.
According to the company, a newly designed chassis provides torsional and thermal stability and a single natural vibration frequency. A new scaleable control system increases the reliability of dramatically reduced wiring - 40% less than conventional printing systems.
Rich Heimsch, president of DEK International, notes that Europa's specification sheet describes the performance customers can expect during actual production. "Europa's Cpk 2.0 at ± 20mm is the figure for true paste on pad repeatability, measured after a full wet print cycle. Many specifications quote fiducial alignment capability only, but it is paste on pad repeatability that really matters to electronics assemblers."
The machine features an interactive user interface, with graphical indications for consumable replenishment, plus on-board help and error recovery. Its software links to DEK's Web-based support services and contains tutorials on setup, process optimization, and maintenance and applications issues.
The company is aiming for notebook contract orders from regional vendors and system integrators, DigiTimes reported, sourcing chairman Johnson Chiang.
ECS, one of Taiwan's largest ODM makers of motherboards, recently split into two units -- EMS and brand products.
While the company's history is in motherboard manufacturing, the EMS group will target a broader product range including motherboards, graphics cards, PC systems and notebooks, DigiTimes said.
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