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No. of Recommendations: 3
Gateway account is about 5% of JBL revenues, it was planned (and is planned) to move it down to 2.5% next year as part of a diversification from PC industry dependence.

Based on 5% and the assumption that Gateway will drop its orders to JBL by 20% (more likely the will stay flat anyway), JBLs revenues will be affected by a mere 1%. More probable JBL will have good use for the capacity anyway. I am not sure if JBL will really notice Gateways slowdown at all.

The steep decline in stock price is just a general mood that PC sales are slowing down due to deceleration of US economy, weak Euro and market saturation. This explains the overreaction because these feelings can not be quantified into a a new valuations of the ECMs. Market seems to be split into bears awaiting a general slowdown in electronic devices sold affecting the ECMs, and bulls assuming that this is way overdone and outsourcing activity would anyway rather accelerate in this scenerio due to higher cost pressure at the OEMs.

M.
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