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  • astral_tsar astral_tsar May 29, 2010 12:55 PM Flag

    Big EMS Providers -- Profitability


    Thanks very much for the response.

    On another topic. One thing that confuses me about Namtai's recent public communications lately. They seem to be saying that they want to deemphasize the "lower margin" consumer segment. Do you have any idea what that might mean? Any opinions about it? (I'm confused because CECP is the high-margin segment of the company, based on their own numbers.)

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    • Dear astral_tsar,

      "de-emphasizing CECP segment due to low margin"

      I also think this is a very curious statement!!!!!

      Nam Tai's CECP segment was its most profitable segment and in 2005 thru 2008 had excellent growth with great profit. So I guess between the end of 2008 until now this segment went very bad. It manufactured things like Sony Playstation accessories, Digital Pens for Leapfrog, Bluetooth headsets for a number of companies and calculators for Texas Instruments. Certainly one explanation is that during this period the global economy hit consumer products hard. But why has it not picked up as the economy has comeback somewhat? The economy impact is certainly not the whole story. The division head became group CEO in early 2009 - did this cause them taking their eye off the ball in the division? I don't know.

      I find the deterioration very disturbing. Also with this segment evaporating the company largely only has LCD and FPCA products - which historically (since 2005) have had poor margins. It also results in a company with a very narrow product set and very high customer concentration. Sharp, Epson, and TMD must represent almost the whole company now.

      If there were quarterly conf calls one could ask these questions. They have been stopped since about the time this division started to go bad - end of 2008.

      Hope this helps.