Nam Tai Electronics, Inc. (NYSE:NTE)

marvman0 (< 20) Submitted: 7/15/2010 3:03:36 PM

Recs: 1

VERY NEGATIVE. I have tried to be objective, however, I would be very pleased to hear from anyone that has a positive business reason to invest in Nam Tai or point out something that I have missed:

The negatives-

Total Lack of Transparency - no quarterly conf calls (since YE 2008), no active IR activity, no analysts covering, AGM moved out of the US, no ability to ask mgmt questions directly. Beyond me how a NYSE board could allow this!

Management Exodus (no competent management left to speak of...):
2007 CEO lasted 6 mths - Warren Lee
NA great CFO left end of 2008 - John Farina
Japanese well connected New CEO left beginning 2009 - Yasukawa
COO left end of 2009 - LP Wang
New CEO (previous division CEO) left beginning 2010 (after 20 years w/ Co.) - Karene Wong
Many others...acting CFO Anthony Chan, entire Legal Team, corp secretaries etc etc
We are left w/ founder Koo +65 years old (Chairman, CFO, chief cook and bottle washer) calling all the shots.

Deteriorating (significantly) top and bottom line WHEN ALL COMPETITORS POSTING BIG POSITIVE NUMBERS!

In a very competitive industry - EMS and clearly one of the smaller players (Nam Tai had dropped from top 15 EMS to now not even 30th; of top five EMS number 1 is approx. over 100x and number 5 over 15x larger. Economies of scale, size (mfg & buying power), global customer solutions matter!

No competitive advantage...the days when china cheap labor is an advantage are gone. All the major players are there and many moving to lower cost areas in Asia like Vietnam. Besides labor rates in China are increasing dramatically and also by 2012 tax rates will effective at least double (refer to Hon Hai's (Foxconn) issues in Shenzhen with many suicides having to raise labor rates and pass pricing increases to customers and moving production to Tiawan).

Nam Tai FPC (where mainly applied to mobile market with Japanese technology) could falter significantly with other Asia tech taking over like the Koreans. Besides, Nam Tai has a deteriorating relationship with its Japanese customers (which I think are close to 75% or higher of the current revenue). (I am sure the X Japanese CEO who left in 2008 and is very well connected - his father is x chairman of Epson - is not singing Nam Tai's praise)

LCD in the form factors and non touch that Nam Tai is in is not a winner.

Both FPC / LCD have been low margins for the company and do not see how they will improve. Nam Tai has already maximized austerity measures e.g. 30% wage cuts for all staff and turfed anyone they could.

Very disturbing is the disappearance of the company's Consumer business which has historically grown very well and had very high profit (company says getting out because low margins...this is a very curious statement...how did it go from very high to very low????? - how did this go to nothing????? Very Scary

Expanding into capital intensive Flexible Printed Circuits w/ NIL previous experience...believe Wuxi Factory largely empty after significant investment (how does company destroy previous lucrative consumer business and invest here?????).

The Positives-

Very strong cash position with no debt.

Stock currently trading at close to cash value so one may spouse limited down side

This is the analysis which leads me to being a strong sell.