Bear Stearns Releases Its Fourth Annual Electronics Manufacturing Outsourcing Survey; Survey Finds Enormous Incremental Revenue Opportunities In The Industry.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 2, 2001

Their names may not be on the computer or the networking router, but they are increasingly responsible for the design and assembly of the entire product. They are called electronics manufacturing service providers or "contract manufacturers," and according to Bear Stearns' latest outsourcing survey, they are going to see a significant increase in incremental revenue over the next 12 months. The survey, coordinated by Thomas Hopkins, Bear Stearns managing director and electronics manufacturing services analyst, found that brand-name companies plan to use contract manufacturers more frequently in order to manufacture their products. Of those companies questioned by Hopkins and his team, 85% said they plan to increase their outsourcing over the next 12 months. "There is an incredible opportunity for contract manufacturers," said Hopkins. "Original Equipment Manufacturers (OEMs) have found that outsourcing makes a great deal of sense, and they plan to significantly increase their use of contract manufacturers in the future."

The Bear Stearns Fourth Annual Electronics Manufacturing Outsourcing Survey questioned the world's leading, mid-tier and emerging original equipment manufacturers from a wide variety of industries. Of the 150 companies polled, 104 replied--representing 71% of the estimated $772 billion in electronics hardware sold worldwide. Some of the key findings of the survey include:

-- 85% of OEMs plan on increasing their outsourcing during the next 12 months.

-- OEMs plan to increase their dependence on contract manufacturers for printed
circuit board assembly and full box-builds. The increase in full box-builds
will represent significant incremental revenue due to extra material and labor
costs.

-- The average OEM hopes to outsource approximately 73% of its total
manufacturing, more than five times the current industry estimate of 13%
outsourced.

-- 40% of the OEMs responding indicated they were hoping to outsource 90% to
100% of their final product, indicating a move towards a virtual manufacturing
model in which all of a company's manufacturing would be done by contract
manufacturers.

"Outsourcing is clearly growing in popularity and is becoming a real growth driver for the industry," said Hopkins. "Regardless of what happens in terms of end-market demand for electronics products, contract manufacturers should see an increase in their business."

Judging from the results of the survey, Hopkins believes estimates for contract manufacturers in the fourth quarter of 2001 and for 2002 could be low. If the indicated growth materializes, these companies could provide attractive investment opportunities. Hopkins indicates that aggressive growth investors should focus on Flextronics (Nasdaq: FLEX) and Celestica (NYSE: CLS) while value investors should look at SCI (NYSE: SCI) and Viasystems Group (NYSE:VG).

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $25.8 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer clearing services, including securities lending. Headquartered in New York City, the company has approximately 11,000 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, San Francisco and San Juan; and an international presence in Beijing, Buenos Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Seoul, Shanghai, Singapore and Tokyo. For additional information about Bear Stearns, please visit the firm's Web site at www.bearstearns.com.