You can't build or repair electronic equipment without test and measurement gear -- the specialty of Tektronix
When compared with last year's fourth quarter, fourth-quarter results for fiscal 2005 were weak. Net sales increased 1% while net earnings fell 6%, after a number of one-time items related to acquisition costs were excluded. Sales beat guidance the company offered in mid-May, when it warned of weak orders; earnings fell within guidance.
In fact, fourth-quarter orders were very weak, falling 8% overall and 25% in the U.S. For comparison, competitor Agilent's
Those looking for hard numbers on Tektronix's $325 million acquisition of Inet will be disappointed. While the company said Inet's growth was stronger than initially projected, it combined Inet's orders with those of Rhode & Schwarz -- a strategic alliance that was shut down in June 2004 -- making it difficult to determine financial results or value added, or both, from the acquisition. Orders for the two were down 2% in the fourth quarter.
While the company still sees softness in some markets, it has ramped up research-and-development spending to 17% of sales in the fourth quarter and 16% of sales for the fiscal year. That's up from 14% for both periods last year. That increased spending should hopefully enable Tektronix to increase introductions of products this fiscal year.
So, what kind of investment is this company?
With $131.6 million in the bank, and no debt, the balance sheet is rock-solid. But when you look at this five-year chart, you see that Tektronix has pretty much tracked the Standard & Poor's 500. That probably isn't going to change, because analysts expect Tektronix to compound earnings at 12% a year over the next five years, while the S&P 500 compounds at 10.6% a year. For that matter, the increased R&D spending amid declining orders (while competitor Agilent's orders nominally increased) indicates the very competitive nature of the industry. For Tektronix and Agilent alike, there is a strong need to innovate, as competitive advantages (or lack thereof) ebb and flow with each company's technological advance.
You can also get a snapshot of Tektronix's 2005 numbers here.
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