A rising tide may lift all boats, but they don't necessarily all float to the same height.
Circuit-board manufacturer TTM Technologies
So you might expect TTM to crush revenue targets on Apple's muscular back. Since smartphones use advanced circuit boards to cram as much functionality as possible into a very small space, that trend should also be good for the company's margins.
But it didn't really work out that way in TTM's fourth quarter. Total revenue of $361 million did indeed impress, beating analyst targets by about $10 million. Non-GAAP earnings just squeaked by Wall Street estimates at $0.26 per share. Sounds good so far, but both the top and bottom lines shrank compared with the year-ago period.
You see, the networking guys are holding TTM back from really riding the smartphone wave. Cisco, Ericsson, and their peers contributed just 33% of a shrinking revenue pile this quarter, down from 37% a year ago and 38% in the third quarter.
TTM CEO Kent Alder won't point fingers at the likes of Cisco, but the long-distance networking customers are a different story. "The networking, particularly in North America, was very solid for us," he said. "With the routers and switches and so forth, they were pretty solid. The telecom part of that end market is still soft, and it's soft here in the U.S. as well as Asia-Pacific, and we don't think that will come back in the first quarter, and maybe some minor comeback in the second quarter."
That just about jibes with the trends we've seen in recent reports by networking companies. In particular, telecom-focused specialists say that their favorite customers just aren't building infrastructure as fast as they used to. Juniper Networks
You can't keep a good company down forever, and TTM is about as solid as they come. Just don't expect a huge bounce over the next quarter or two as the telecom market sorts itself out. Investing in this stock today takes patience, young Fool.
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Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Cisco Systems and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Cisco Systems, and TTM Technologies, creating a covered strangle position in TTM Technologies, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.