Contract manufacturers shares fall after downgrade THURSDAY, FEBRUARY 28, 2002 2:32 PM - Reuters U.S. Company News LOS ANGELES, Feb 28 (Reuters) - Shares in the top electronic contract manufacturing companies were down on Thursday, with one firm at an almost 5-year low, after brokerage ABN Amro cut its earnings estimates for most of the sector, saying the recovery in the telecom industry is progressing more slowly than expected. Analyst Keith Bachman lowered estimates for Celestica Inc. (CLS) , Jabil Circuit Inc. (JBL) , Sanmina-SCI Corp. (SANM) and Solectron Corp. (SLR) , citing evidence of a delay in the recovery in telecom spending and indications that the recovery may be "modest at best." He said capital spending cuts by major telecom carriers such as BellSouth Corp. (BLS) were a bad sign, as was Motorola Inc.'s (MOT) outlook for global wireless spending. Solectron shares, which have been under heavy pressure of late, traded as low as $8.23 on Thursday afternoon, a level not seen since May 1997. They were at $8.25, down 4.6 percent, as of mid-afternoon on the New York Stock Exchange. Other sector shares were down as well. Celestica shares fell 4 percent to $34.27, while fellow NYSE-listed company Jabil Circuit dropped 1.9 percent at $19.23. Sanmina-SCI shares were down 6.1 percent at $10.05 on Nasdaq. Shares in Flextronics International Ltd. (FLEX) , the only top-tier company in the sector for which Bachman did not cut estimates, were down 7.2 percent at $14.10 on Nasdaq. The $100 billion electronics manufacturing services (EMS) sector derives most of its business from high-volume, low-margin production of products such as cell phones, data and networking products, and video game systems. But Bachman's note was not entirely negative. "We remain optimistic on the enterprise market and believe that a recovery in (information technology) spending is under way, lead by storage area networking," he said. Bachman lowered the calendar 2002 earnings estimate on Celestica to $1.40 a share from $1.49, and cut his 2003 estimate to $1.75 from $1.87. He lowered his 2003 revenue estimate to $12.5 billion from $13.1 billion. For Jabil, Bachman lowered his fiscal 2002 earnings estimate to 40 cents a share from 46 cents, and his revenue estimate to $3.5 billion from $3.6 billion. For 2003, he cut his earnings estimate to 65 cents a share from 76 cents, and his revenue forecast to $4.2 billion from $4.5 billion. For Sanmina-SCI, he cut his fiscal 2002 earnings estimate to 11 cents a share from 15 cents and his revenue forecast to $10.2 billion from $10.5 billion. For fiscal 2003 he cut his earnings estimate to 50 cents a share from 62 cents but left his revenue forecast unchanged. For Solectron, he cut his fiscal 2002 earnings estimate to 18 cents a share from 22 cents, and cut his revenue estimate to $12.5 billion from $12.8 billion. For fiscal 2003, he cut his earnings estimate to 40 cents from 50 cents and cut his revenue forecast to $15 billion from $15.3 billion. The ABN Amro cut comes less than 10 days after Lehman Brothers similarly cut its estimates for shares in the sector on similar concerns, and Deutsche Banc Alex. Brown analyst Chris Whitmore told Reuters last week he thought estimates needed to come down further.