The verdict is in.
Contract electronics makers,once on the “hot” list of technology watchers,have definitely moved to the “not” list.
That’s how it seems after the latest round of earnings, in which two of Orange County’s largest contract electronic makers,Santa Ana-based TTM Technologies Inc. and Anaheim’s DDi Corp.,noted slowdowns in their businesses during the third quarter.
Both companies make printed circuit boards for computers, wireless phones and other electronics. They make them on a “quick-turnaround” basis for pressing orders or under long-term contracts.
“While business conditions were relatively stable overall, we have experienced some variability by customer and end market,” said Kent Alder, TTM’s chief executive, in a statement.
Things weren’t all that different at DDi.
“North American (printed circuit board) pricing and demand both fell short of our original expectations for the third quarter,” said Bruce McMaster, DDi’s chief executive, in a statement. “We are pleased to report that we have seen both pricing and unit demand stabilize during the month of October. However, we are not seeing a return to the pricing levels experienced on our longer-lead orders during the second quarter of 2004.”
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DDi worker: Q3 demand “fell short” |
There was some question about the health of contract electronics makers earlier this year after DDi warned investors sales would be lower than expected.
DDi and TTM benefited from the pickup in the economy last year and in the early part of this year. As demand for computers, networking gear and other products returned, companies turned to DDi and other rapid-fire electronics makers, rather than sign long-term deals for circuit boards.
But technology products that use printed circuit boards are cyclical.
Even so, sales still are better than last year. TTM reported revenue of $62 million for the third quarter, a 37% increase from a year earlier. TTM’s net income was $8 million for the quarter, compared to $2.5 million for the same quarter a year ago.
Similarly, DDi saw an increase in sales from a year earlier. They came in at $72 million, a 22% increase from the same period last year. The company lost $2.2 million, versus a $3.9 million loss a year earlier.
You have to look at the sequential numbers to get a real feel for how the business is slowing. For TTM, revenue increased $600,000 from the second quarter,1%. For DDi, sales decreased 4% from the second quarter.
Flashback, Thanks to Interchange
Back in the late 1990s, I remember watching my investments like a hawk.
Then, of course, your shares could increase by ungodly proportions in a single day, which made the drudgery of watching minor stock moves much more exciting.
And the place to get the scoop on the stock moves? The Internet message board, of course. I still can recall a short seller’s predication on Internet grocer Webvan Group that the stock,then around $19 a share,would be below $6 in six months.
As a Webvan holder, I thought that was nonsense. But we all know how Webvan turned out.
That makes it particularly entertaining to watch the message boards on Internet advertising company Interchange Corp., based in Laguna Hills. Interchange shares are acting a bit like Internet shares of long ago.
As we’ve noted recently, Interchange debuted on the market at about $8 a share in October before falling to about $7.80 in the days immediately following the offering.
Since then, the company’s stock climbed to a recent close of more than $20.That’s quite an increase, giving Interchange a market value of more than $140 million.
A big factor in the runup: wild enthusiasm on message boards.
And posters never are short of quips.
“Today’s chart looks like a ladle,” said one poster. “I know nothing about charts. Is a ladle better than a cup? Just kidding, but I really don’t anything about charts.”
Said another: “Someone wants my shares … but you won’t get them. Not selling. Sorry shorties (short sellers).”
The response? “Better get used to me,” said one person purportedly shorting the stock. “I will be here all day tomorrow. It’s all fun and games ’til this puppy gets a much needed haircut. See you all at 15.”
Of course, stock messages usually are junk. Nobody really knows anything expect what the stock has done that day. But some of them do know humor.
Ahhh, seems like old times.
One difference: Interchange is profitable, with third quarter operating profit of $537,000 on sales of $5.4 million.
DynTek Lands Contract
Irvine-based DynTek Inc., which provides software, technology and management consulting services to state and local governments, recently closed a deal with a large maker of specialty building materials.
Even though the deal is small potatoes,worth $750,000,Steve Ross, DynTek’s chief executive officer, explains why it’s a big deal for the company.
“This contract is a significant milestone for DynTek, since it represents the first multi-hundred thousand dollar voice-over-IP contract to close since our acquisition of Redrock just a few weeks ago.”
Irvine-based Redrock helps companies set up networks and provides voice over Internet phone service.
