By Tess Stynes
TE Connectivity Ltd. on Wednesday said it agreed to sell its
broadband-networks business to CommScope Holding Co. for about $3
billion.
The business TE Connectivity is selling is part of its
network-solutions segment, one of the company's four divisions.
The broadband-networks unit's products provide the physical
network for telecom and cable networks that allows signals to be
transmitted along the Internet. The business had revenue of $1.9
billion during the company's latest business year, which ended in
September.
The deal doesn't include the networking division's subsea
fiber-optics business, which is used by telecom and oil and gas
customers and has a big share of its market. The divestiture also
doesn't include TE's data communications business, which makes
connectivity products for applications such as servers, routers and
storage equipment.
The sale allows TE Connectivity to focus more closely on its
sensor technology business, which expanded significantly with its
recent $1.4 billion acquisition of Measurement Specialties.
In an interview, TE Connectivity Chairman and Chief Executive
Tom Lynch said that after the deal closes--which is expected by
year's end--about 90% of TE's business will focus on sensors, with
about 80% focused on so-called harsh-environment products, which
are found inside a range of products including vehicles, tanks,
factory-floor equipment and appliances.
That compares with roughly 78% of its business focused on
sensors and roughly 70% in harsh-environment before the closing, he
said.
The majority of the proceeds from the sale will go toward
expanding the company's share-buyback program by $3 billion. The
move brings the company's repurchase program to a total of about
$3.7 billion, Chief Financial Officer Bob Hau said.
TE also is targeting some of the proceeds for investments in its
sensors and connectivity business, which Mr. Lynch said would
include spending for resources in its current business as well as
more potential acquisitions to gain needed technologies and
capabilities.
In TE's latest quarter, revenue growth at the transportation and
industrial segments again offset declines in its network and
consumer segments.
Mr. Lynch said the strength in the sensors and harsh-enviroment
businesses is offsetting impacts of a stronger dollar at the
company, which has about a third of its business in Europe and
significant business in Japan.
For the quarter ending in March, the company forecast per-share
earnings of 98 cents to $1.02 and revenue of $3.55 billion to $3.65
billion. Analysts polled by Thomson Reuters expected per-share
profit of $1.02 and revenue of $3.68 billion.
For the fiscal first quarter ended Dec. 26, TE Connectivity
reported a profit of $472 million, or $1.14 a share, up from $353
million, or 84 cents a share, a year earlier.
Revenue increased 4.2% to $3.45 billion.
The company had forecast per-share earnings of 88 cents to 92
cents and net sales of $3.46 billion to $3.56 billion.
Michael Calia contributed to this article.
Write to Tess Stynes at tess.stynes@wsj.com
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