It's not every day The Motley Fool cuts up on the "$35 billion global interconnect products and [connector] systems industry," but they did so recently, and it's in the category of a "must read" for those following the connector and wiring harness interconnection industries. In case you were wondering just how do the two 900-lb. gorilla suppliers of electronic interconnect assemblies match up from Wall Street's point of view, The Fool notes,
"Amphenol and Molex could be twins. They both specialize in electronic interconnect assemblies, unlike Tyco Electronics (NYSE: TEL), which in addition to connectors, sells network infrastructure and undersea telecommunications systems. Amphenol and Molex have similar revenues. They're globally based. And they sell into many of the same markets, including automobiles, computers, and cell phones."
The Fool crunches some numbers, and determines that, in a highly fragmented industry where the 10 largest companies have a combined market share of just 49% (Amphenol's numbers), at the proverbial end of the day, "Amphenol is getting almost twice the margin on its product line, and that spills over as free cash flow" -- largely the result of shrewdly positioning itself into product lines where it can leverage some significant pricing power.
Meanwhile, snarks the Fool, "The only thing Molex's weak cash flow is generating is awkward comparisons." Yikes! Cheeky Fool!
Full Story: Amphenol Makes Boring Pay (The Motley Fool)
-- Matt Vincent
