CIBC World Lowers Sanmina Rating

Analyst Todd Coupland cites the contract manufacturer's weakening fundamentals

Sanmina (SANM ) sees $0.10 Q3 EPS from operations on $760-$775 million in revenues. CIBC World downgraded its investment rating on the shares to hold from buy.

Analyst Todd Coupland says the downgrade was due to weakening fundamentals. He notes management has guided estimates lower, citing a dramatic end-market slowdown, excess inventory throughout the supply chain, and zero visibility in the company's primary end market, telecom/networking. Coupland says management expects inventory channels to clear by the end of the September quarter. He cut his $900 million Q3 revenue forecast to to $730 million, and $945 million estimate for Q4 revenues to $730 million. Coupland also reduced his $1.08 fiscal 2001 (Sep.) EPS estimate to $0.90, and his $1.25 projection for fiscal 2002 to $0.70. He notes Sanmina is underperforming both Jabil Circuit (JBL ) and Solectron (SLR ) given its exposure to communications end markets.

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