Ticonderoga on Tech Supply Chain: April Taiwan Component Barometer Sales Fall 2% and Below Averages
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Rating Summary:
16 Buy, 12 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Ticonderoga on Tech Supply Chain: April Taiwan Component Barometer Sales Fall 2% and Below Averages by Brian White
Ticonderoga analyst says, "Component Barometer Sales Fall 2% M/M in April - April unconsolidated Taiwan sales for the Component Barometer declined 1.9% M/M to reach NT$20.87 billion and below the six-year average April sales increase of 1.7%. Across our Taiwan Tech Barometers this week, April sales consistently came in below typical seasonality and the sales cycle drifted lower, which indicates to us that the more cyclical tech supply chain stocks will continue to fight headwinds in 2011."
"Component Sales Cycle Decelerates, Well Below Peak - The sales cycle for the Component Barometer decelerated below double-digit territory in April to up 9% Y/Y versus up 20% in March. Keep in mind, the sales cycle for the Component Barometer is well below the peak reached in January 2010 of up 52%."
"MediaTek's Sales Dip 1% M/M and Much Weaker than Seasonality. Outside of our Component Barometer but an important fabless semiconductor player in the handset and digital multimedia world is Taiwan-based chip vendor MediaTek. MediaTek reported non-consolidated sales for the month of April that declined by 1.3% M/M vs. a six-year April average of up 8.4% M/M."
"Rising Costs Fuel Uncertainty but APH Best Positioned - We expect the component supply chain to fight the headwinds of both a decelerating sales cycle and the potential for lower seasonality in the coming months, combined with surging raw material prices and rising labor costs in China. During the March quarter, this rising cost environment negatively impacted the margins in our connector coverage universe, which includes Amphenol (NYSE: APH)(Buy) and Molex (Nasdaq: MOLX)(Neutral). Netting this all out, we continue to believe Amphenol has proven its ability to consistently navigate through challenging environments through a combination of market share gains, well-timed acquisitions and a savvy pricing strategy."
Ticonderoga analyst says, "Component Barometer Sales Fall 2% M/M in April - April unconsolidated Taiwan sales for the Component Barometer declined 1.9% M/M to reach NT$20.87 billion and below the six-year average April sales increase of 1.7%. Across our Taiwan Tech Barometers this week, April sales consistently came in below typical seasonality and the sales cycle drifted lower, which indicates to us that the more cyclical tech supply chain stocks will continue to fight headwinds in 2011."
"Component Sales Cycle Decelerates, Well Below Peak - The sales cycle for the Component Barometer decelerated below double-digit territory in April to up 9% Y/Y versus up 20% in March. Keep in mind, the sales cycle for the Component Barometer is well below the peak reached in January 2010 of up 52%."
"MediaTek's Sales Dip 1% M/M and Much Weaker than Seasonality. Outside of our Component Barometer but an important fabless semiconductor player in the handset and digital multimedia world is Taiwan-based chip vendor MediaTek. MediaTek reported non-consolidated sales for the month of April that declined by 1.3% M/M vs. a six-year April average of up 8.4% M/M."
"Rising Costs Fuel Uncertainty but APH Best Positioned - We expect the component supply chain to fight the headwinds of both a decelerating sales cycle and the potential for lower seasonality in the coming months, combined with surging raw material prices and rising labor costs in China. During the March quarter, this rising cost environment negatively impacted the margins in our connector coverage universe, which includes Amphenol (NYSE: APH)(Buy) and Molex (Nasdaq: MOLX)(Neutral). Netting this all out, we continue to believe Amphenol has proven its ability to consistently navigate through challenging environments through a combination of market share gains, well-timed acquisitions and a savvy pricing strategy."
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