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Report: EMS Meets Challenges and Growth in 2007
May 11, 2007 |Estimated reading time: 1 minute
STAMFORD, Conn. EMS providers posted steady gains in Q'01 2007 year-over-year, but must overcome challenges in restructuring, geographic shifts, and diversification to continue growth, says analyst firm Gartner, Inc. Nine indicator EMS providers Flextronics, Sanmina-SCI, Solectron, Celestica, Elcoteq, Benchmark, Plexus, Jabil, and Venture posted a combined revenue gain of 16% over Q'01 2006, and several saw more than 10% growth. Joan Brown and Alfonso Velosa of Gartner compiled the EMS report.
Most of the nine companies took in lower revenues in Q'01 than the previous quarter, a typical seasonal decline following the holiday season in Q'04. In year-over-year performance, Flextronics, Jabil, Solectron, and Benchmark Electronics achieved double-digit growth, and most companies improved. Flextronics growth came from consumer and mobile businesses, while Jabil gained in telecommunications, as well as instrumentation and medical assemblies. Acquisitions Jabil's GreenPoint purchase and Benchmark's Pemstar acquisition boosted revenues and brought in new customers, says Gartner. The analysts see improved core competencies and more exploration in vertical and service diversifications in the near-term for EMS providers.
Celestica revenues dropped slightly year-over-year, as the company continues to resolve issues surrounding Mexico operations (begun in late 2006) and executive personnel shifts. For more on Celestica's restructuring, see Celestica Reorganizes Sets Sights on Efficiency. Elcoteq is also experiencing problems related to Mexico facilities, including the recent decision to close its Juarez, Mexico, facility. Elcoteq will move headquarters from Finland to Luxembourg in 2007. Sanmina dealt with lower revenue due to customer requests for early push-outs, reports Gartner, and difficulties with divesting PC and telecom businesses. Gartner suggests examining an EMS provider's relationship to major OEMs to determine risk/growth possibilities, and to study a company's diversification strategy bill of materials (BOM) management, repair/refurbish services, vertical integration to predict revenue growth.