Tyco Electronics Ltd. (TEL) filed Annual Report for the period ended 2009-09-25.
Tyco Electronics Ltd., global provider of engineered electronic components for thousands of consumer and industrial products; network solutions and systems for telecommunications and energy markets; and wireless systems for critical communications, radar and defense applications. They design, manufacture and market products for customers in industries ranging from automotive, appliance, aerospace and defense to telecommunications, computers and consumer electronics. Tyco Electronics Ltd. has a market cap of $11.28 billion; its shares were traded at around $24.6 with a P/E ratio of 29.6 and P/S ratio of 1.1. The dividend yield of Tyco Electronics Ltd. stocks is 2.6%.
Highlight of Business Operations:
•Global leader in passive components. With net sales of approximately $10.3 billion in fiscal 2009, we are significantly larger than many of our competitors. In the fragmented connector industry, which was estimated to be $34 billion in fiscal 2009, our net sales were approximately $6 billion. We have established a global leadership position in the connector industry with leading market positions in the following markets: •Automotive—#1 •Industrial—#1 •Computers and peripherals—#2 •Telecom/data communications—#3 Our scale provides us the opportunity to accelerate our sales growth by making larger investments in existing and new technologies in our core markets and to expand our presence in emerging markets. Our leadership position also provides us the opportunity to lower our purchasing costs by developing lower cost sources of supply and to maintain a flexible manufacturing footprint worldwide that is close to our customers' locations.
•Process and product technology leadership. We employ approximately 7,000 engineers dedicated to product research, development, and engineering. Our investment of over $530 million in product and process engineering and development together with our capital spending of over $300 million in fiscal 2009, enable us to consistently provide innovative, high-quality products with efficient manufacturing methods. •Diverse product mix and customer base. We manufacture and sell a broad portfolio of products to customers in various industries. Our customers include many of the leaders in their respective industries, and our relationships with them typically date back many years. We believe that this diversified customer base provides us an opportunity to leverage our skills and experience across markets and reduces our exposure to particular end markets, thereby reducing the variability of our financial performance. Additionally, we believe that the diversity of our customer base reduces the level of cyclicality in our results and distinguishes us from our competitors. •Balanced geographic sales mix. We have an established manufacturing presence in approximately 25 countries and our sales are global. Our global coverage positions us near our customers' locations and allows us to assist them in consolidating their supply base and lowering their production costs. We believe our balanced sales distribution lowers our exposure to any particular geography and improves our financial profile. In addition, our strategy is to continue to increase the percentage of production from lower-cost countries. •Strong and experienced management team. We believe we have a management team that has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Our Chief Executive Officer and segment leaders average more than 20 years of experience of which most is in the electronics industry. They are supported by an experienced and talented management team that is dedicated to maintaining and expanding our position as a global leader in the industry. Our Strategy
•Extend our leadership in key emerging markets. We seek to improve our market leadership position in emerging geographic regions, including China, Eastern Europe, and India, which we expect will experience higher growth rates than those of more developed regions in the world. In fiscal 2009, we generated $1.4 billion of net sales in China, $0.7 billion of net sales in Eastern Europe, and $0.2 billion of net sales in each of India and Brazil. We believe that expansion in these regions will enable us to grow faster than the overall global market. •Supplement organic growth with strategic acquisitions. We will evaluate and selectively pursue strategic acquisitions that strengthen our market position, enhance our existing product offering, enable us to enter attractive markets, expand our technological capabilities, and provide synergy opportunities. •Improve operating margins. We intend to continue to increase our productivity and reduce our manufacturing costs. We plan to achieve this by developing best in class manufacturing, enhancing our purchasing strategy through design initiatives and sourcing of materials from suppliers in lower-cost regions, simplifying our distribution network, and further implementing best practice continuous improvement programs. We also plan to continue to simplify our global manufacturing footprint, both by migrating facilities from higher-cost to lower-cost countries and by consolidating within countries. With respect to our manufacturing rationalization plan, we expect to incur restructuring charges of approximately $350 million through 2011 related to current as well as future restructuring actions. These initiatives are designed to help us maintain our competitiveness in the industry. •Accelerate new product development through research and development excellence. We seek to continue to increase the percentage of our annual net sales from new products. In fiscal 2009, we derived approximately 31% of our net sales from new products launched within the previous three years. In order to accomplish this goal, we intend to focus our research, development, and engineering investment on next generation technologies and highly engineered products and platforms, and leverage innovation across our segments. Our Products
TEL is in the portfolios of Richard Pzena of Pzena Investment Management LLC, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Bill Nygren of Oak Mark Fund, Dodge & Cox, Chris Davis of Davis Selected Advisers, Kenneth Fisher of Fisher Asset Management, LLC, Murray Stahl of Horizon Asset Management, Murray Stahl of Horizon Asset Management.
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