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Hello Linda from RI:

I am holding some shares in FLEX. I believe that it is a good company to invest in. My target price is $16 per share. However lately I have seen comments from Motorola citing a slowdown in cellphone sales. I think that there are concerns out there about what will demand be for some of the consumer products that FLEX manufactures (like cellphones)?

Stronger expected demand for the products FLEX produces would probably lead to stronger gross margins that it would be able to earn going forward. FLEX has been reporting good results over the last 6 months and I am hopeful that this trend will continue. My general perception is based on the forward guidance that management has provided when they have reported earnings. On January 30th 2007 FLEX reported strong earnings and projected the following guidance (which I felt was positive):

For the fourth quarter ending March 31, 2007, revenue is expected to be approximately $4.8 billion and diluted EPS is expected to be approximately $0.20. This represents year-over-year revenue growth of approximately $1.3 billion, or approximately 36%, and implies an operating profit growth rate of approximately 40%. Management emphasized that there is a range around the March 2007 quarter guidance as demand trends and the economy are dynamic.

GAAP earnings per diluted share are expected to be lower than the guidance provided herein by approximately $0.03 per diluted share per quarter reflecting quarterly intangible amortization and stock-based compensation expense.

FLEX will be reporting its fiscal fourth quarter results on April 26th. I am looking forward to find out how they have been doing for the last few months and what kind of forward guidance they will provide.

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