Avnet Inc.’s (AVT) operating unit, Avnet Electronics Marketing Americas, recently entered into a distribution contract with Triad Semiconductor. With this association, the company will be now engage in supplying Triad’s low-cost mixed signal ViaASIC solutions in Americas.
Established in 2002, Triad Semiconductor manufacturers low-cost mixed signal ASICs through its unique via-configurable array (VCA) technique. Triad’s VCAs have almost the same features as the field programmable gate arrays (FPGAs) and it also consists of analog cells, which help in integrating analog and digital circuits.
Now, with the agreement, Avnet’s clients in the medical, industrial, consumer and automotive sectors will be able to easily integrate various semiconductor solutions through Triad’s cost effective ViaASIC services. Management stated that the contract would not only broaden the company’s product portfolio but also address the need of the customers more efficiently. Triad’s exclusive IC technique is expected to provide cheaper and faster IC integration to the company’s clients.
The company’s continuous contract wins and strategic acquisitions are expected to boost its long-term potential. During the fourth quarter of fiscal 2012, revenues from Avnet’s Electronics Marketing (EM) segment declined 5.0% from the year-ago quarter to $3.76 billion, albeit within management’s guidance range of $3.75 billion to $4.05 billion. However, we can still be optimistic about a better performance from this segment in the upcoming quarters. For the first quarter of fiscal 2013, the segment’s sales are likely to be within the management's guidance range of $3.55 billion – $3.85 billion.
Avnet faces fierce competition from big players in the semiconductor industry. One of the stalwarts here is Arrow Electronics Inc. (ARW), which has recently inked two distribution agreements with Microchip Technology Inc. (MCHP) and Intematix Corporation. It remains a formidable rival, especially in the climate of proactive technological advances. In addition, there are several other big players such as Wesco International Inc. (WCC) and Anixter International Inc. (AXE) in the industry.
The current Zacks Consensus Estimates for the first quarter of fiscal 2013 and for fiscal 2013 are 84 cents and $4.11, representing year-over-year growth of (6.79%) and 1.33%, respectively. The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. However, we are maintaining a long-term ‘Neutral’ recommendation on the stock.
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