Too much for TTM?
Santa Ana-based circuit board maker TTM Technologies Inc. recently said it planned to buy Tyco International Ltd.’s circuit board business for $226 million.
The move is huge for TTM. The Tyco unit did $383 million in sales last year, versus TTM’s $274 million.
One analyst contends TTM not only bought off more than it could chew, it picked the wrong item off the menu.
Michael Walker of Credit Suisse downgraded the stock from “neutral” to “underperform” after the buy was announced.
His biggest concern seemed to be TTM’s profit margins, key for an industry that’s been squeezed by cheap overseas production.
TTM has been working to get more “quick-turn” business,circuit boards made and delivered more quickly than they could be in Asia. Quick turn garners higher profits.
Tyco’s unit doesn’t help much on that front, Walker wrote in a research note.
“The transaction will be severely dilutive to TTM’s margins, and given (management)’s indication that synergy opportunities are minimal, it’s unclear how margins will recover,” Walker said.
When TTM announced the buy on Aug. 2, investors bid up the stock by about 10%. But once the research note came out, the stock started to lose steam and now trades slightly below where it was before the announcement.
The company has said the Tyco buy is a big positive for the company, diversifying TTM into the right markets.
“The acquisition of Tyco Printed Circuit Group makes us a leader in the attractive military/aerospace sector of the PCB industry,” Kent Alder, TTM’s chief executive, said in a statement.
Tyco could turn to TTM for more quick-turn business, Alder said. Tyco has about 10% of its business in quick-turn sales, he said.
New Job for Conexant Guy
The No. 2 guy is finally No.1.
Matt Rhodes, former president of Newport Beach-based Conexant Systems Inc., took the job of chief executive at Santa Clara-based Teranetics Inc., a privately held chip company.
You might remember Rhodes had made his intentions clear earlier this year.
In January, Rhodes, who had been Conexant’s president since 2003, said he planned to leave. Dwight Decker, the company’s chief executive and chairman, assumed Rhodes’ duties.
Decker’s 2004 return to Conexant made Rhodes’ shot at getting the top job pretty slim.
“I do have a goal to be CEO of a company,” Rhodes had said. “I would probably get that shot outside sooner than I would inside.”
Decker stepped down as chief executive in early 2004 after Conexant bought Red Bank, N.J.-based GlobespanVirata Inc.
As part of the deal, Globespan chief executive Armando Geday took over running Conexant. Decker became chairman. But the arrangement didn’t produce profits.
The board asked Decker to come back in late 2004 to push through a turnaround. Conexant had said it had no plans to get another president.
Teranetics is a startup that has raised at least $10 million in venture funding, according to SiliconValley.com. The company designs chips that handle faster Ethernet speeds on traditional twisted copper wires, which is cheaper than other types of wiring.
Funding Round
A Mission Viejo company has landed an initial venture capital round.
Incuity Software Inc., a developer of software for manufacturers, said it recently closed on an investment from Sacramento-based American River Ventures and Santa Monica-based Palomar Ventures Management LLC, which has an Irvine office.
The company didn’t announce the amount officially, but in an article in Managing Automation News, a company official said the amount was $5 million, bringing total investments to $7.3 million.
Incuity plans to use the financing to support its growing sales and support operations. In addition, Incuity plans to grow its work force and speed up product development.
The software, which began shipping to customers in March, is in use at companies such as 3M Co. and Frito-Lay Inc.
Incuity can access information over any network and then analyze and process the data to improve efficiencies, among other things.
Randy Lunn, Palomar’s Irvine-based partner, said the company made a good investment for its products and its target market.
Tech Talk
Last week I stopped by an Octane event that featured a speech by the new technology guy for the Department of Commerce, Robert Cresanti.
His technical title is undersecretary of Commerce for technology. Octane is the local technology group that Conexant’s Decker started.
The room at University of California, Irvine, was full with around 200 people.
At times, Cresanti sounded more like Thomas Friedman, author of “The World is Flat,” than a techie.
It’s especially tough for the U.S. because the country leads in many technology areas. So everyone tries to be as good as us, and that chips away at our dominance, Cresanti said.
“We’re targeted as a front-runner,” he said.
He pointed to a few government programs that will devote more to research and development. He also seemed to side on those who would want more liberal immigration and foreign-student policies to help get more of those smart people to the U.S.
