Ticonderoga Securities on Tech Supply Chain: June Auto Sales Fall, Momentum Peaking

Ticonderoga analyst summary and comments on June auto sales and tech companies exposed to results

June Auto Sales Decline on Seasonality and Fall Short of Expectations: Aggregate U.S. June unit sales decreased by approximately 11.5% month-over-month for the seven major auto makers, which include GM, Ford (NYSE: F) (Not-rated), Chrysler, Toyota (NYSE: TM) (Not-rated), Nissan (OTC: NSANY), Honda (NYSE: HMC) (Not-rated), and Hyundai. This June performance is slightly below the three-year average decrease of 10.9% for the month of June and the estimated June decline of 9.5% (six of the seven vendors) projected by Edmunds.com.

Tone at GM and Ford Was a Mixed Bag: Both GM and Ford held conference calls today, and we felt the tone was much more of a mixed bag versus previous gatherings.

Auto Momentum Slowing—Both TEL and MOLX Exposed: In our coverage universe, Tyco Electronics (NYSE: TEL) (Neutral-rated) (35% of 1QCY10 revenues) has the most significant auto exposure and remains highly sensitive to auto trends. Molex (Nasdaq: MOLX) (Neutral-rated) also has an important auto business (17% of 1QCY10 revenues) but is less reliant on the recovery.

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