TE Connectivity Ltd (NYSE:TEL) Shifting Focus To Sensor and Connectivity Solutions


Dallas, Texas 07/24/2015 (FINANCIALSTRENDS) – Declining orders from China as well as inventory tightening efforts by customers in the US has been touted as the reason behind TE Connectivity Ltd (NYSE:TEL) move to cut its full-year guidance. The Switzerland-based company has opted to slash its full-year guidance despite posting a 1.4% year-over-year increase in sales that came in at $3.118 billion.

Sales Growth

Sales in the quarter were up thanks to ongoing growth in automotive, sensors, commercial aircraft, and subsea communication business. Harsh environment conditions in the quarter also had a big impact on the impressive showing in the quarter. The successful integration of the previously acquired AdvancedCath also had an impact on earnings

Growth in the quarter according to the chief executive officer was down to TE Connectivity Ltd (NYSE:TEL) paying more attention to sensors and technology used in cars to avert the effects of harsh environment conditions. Demand in China may have slowed halfway through the quarter but still enough to meet the company’s expectations. A rebound should be expected heading into year-end as uncertainty in China cools off.

Earnings Expectations

For the year ending September TE Connectivity Ltd (NYSE:TEL) expects per-share earnings of between $3.60 and $3.66 having lowered its high-end estimates by eight cents. Inventory tightening measures initiated by customers in the US should result in sales of between $12.28 billion and $12.42 billion against a prior guidance of between $12.35 billion and $12.65 billion.

TE Connectivity Ltd (NYSE:TEL) expects currency fluctuations as the dollar continues to strengthen against the major to cut per-share earnings by 32 cents. Currency fluctuations could also reduce sales value by $925 million. The company is steadily realigning its business with a shift of focus to connectivity and sensors market. TE Connectivity Ltd (NYSE:TEL) has also been strengthening its applications for harsh environment where it hopes to attain substantial growth going forward.

Acquisitions also continue to play a key role in the company’s growth strategy having acquired Measurement Specialties for $1.4 billion last year. The sale of the broadband network business should be completed within the next three months as TE Connectivity Ltd (NYSE:TEL) looks to focus more on connectivity and sensor solutions.