This week I am going to go over the results of Keysight and leave you a bit of a Thanksgiving Message.
Keysight is new as a public standalone company and is the spin off of the Test and Measurement Group from Agilent. This first year will be somewhat complicated from a reporting standpoint as there is all the work that needs to continue as part of the spin-out. This may present investment opportunities as there are potential one time events that may cause over reaction in the market.
In many ways, this newness prevents effective analysis on this first call. About all we can do is listen to the words and trust that they are meaningfully representing the business. What we can work from is the numbers that we have and we don’t really have a full set of those. The business is larger than the other 3 companies I analyze together. Keysight had $130M in profit in Q4 (What we think of Q3 has been set as their year end). This is larger than the Revenue of either Calix or Enphase. As a percentage, they are working to a long term goal of 18% profit. That is excellent for this kind of company.
There is a very good investor presentation that helps outline the business. But if I had to summarize things, Keysight is a substantial firm that is in a slow growth business. This business is highly profitable. So, as an investor I will want them to talk about a dividend about 1 year from now. They are in existing markets that are growing at single digit percentages. That means that you should not expect the kind of growth that you would from a different kind of High Tech Firm. That means that the cash needs to be deployed to do something to impact the stock price or be returned to the shareholders. If they don’t return it (partially or in full), this becomes a much riskier proposition as an investment.
Stay tuned for next quarter’s results at Keysight!
Now for the Thanksgiving message. This is starting the time of year where we do two things. Look back over the year for how we did and plan for next year. As a shout out to my clients, I have seen a tremendous growth in their businesses. I am grateful for their choice in working with me to help them grow their businesses. I look forward to a much better 2015 with them as we start to plan for next year. If you want to get the kind of results (doubling their revenue or more) that they have gotten, just let me know at firstname.lastname@example.org. The first conversation is always free and we can see if there is a fit between us.
To all have a great Thanksgiving, it is my favorite Holiday of the Year!
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