Flextronics

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Flextronics International

Nasdaq:FLEX :: Rahat Ahmed & Joshua Li :: IAG :: October 26, 2001

The Problem

How does Microsoft penetrate the highly competitive gaming console market in 15 months compared to 30 for Sony’s Playstation 2?

The Solution

Flextronics

The Industry

Electronics Manufacturing Services (EMS)

Electronics Manufacturing Services

• Contracted by OEMs to “manufacture products”

OEM: Original Equipment Manufacturer

· Sony, Toshiba, Ericsson, Motorola, Nokia

• Average growth rate of 25% per year • Bear Stearns estimates:

1999 Market: $73.2 billion 2003 Market: $149.4 billion Total Market Potential: $500 billion

What Do They Do?

• Past: Simply (sub)assemble products • Present: Begun adding…

Custom components Design services Supply chain management

• Future: One-Stop Shop

Everything from concept design to ultimately taking orders from customers and then directly delivering them

Why Are They Hot?

• Margins are gaining in importance

OEMs stick to their best areas

· Research & Development · Sales, Marketing & Branding · Manufacturing & Logistics · Support

Outsource the rest

• EMS industry is becoming full-featured

“One-Stop Shop” equates to lesser hassle

Leading Companies

• Solectron (Milipitas, California)

HP, Ericsson, Cisco Systems, Compaq, IBM

• Celestica (Toronto, Canada)

HP, IBM, NEC, Sun Microsystems

• SCI Systems (Huntsville, Alabama)

HP, Nortel, Nokia

The Company

Flextronics International (Nasdaq:FLEX)

Quick Company Profile

• • • • Incorporated in Singapore in 1990 Went public in 1994 Active in 28 countries across 4 continents Clientele includes:

Alcatel, Cisco Systems, Compaq, Ericsson, Hewlett Packard, IBM, Lifescan, Microsoft, Nokia, Nortel, Palm, Philips, Siemens, AG, Sony, Xerox

Quick Financial Profile

• #1 EMS company in market capitalization ($11.91 billion > 9.52 billion) • #2 EMS company in revenue • Growth from 2000 to 2001

Revenue: 74% ($12.1 billion) Cash...