Xmultiple Technologies, Incorporated: SWOT Analysis Report ... · PDF fileSP-130-A SWOT...

SP-130-A

SWOT Analysis Report

SWOT ANALYSIS REPORT of 16

Xmultiple Technologies, Incorporated: SWOT Analysis Report and Company Profile Reference Code: Xmultiple SP130-A Published: Jan 2013

Xmultiple Technologies, Inc. 1060 Los Angeles Avenue Simi Valley, CA 93065 805-579-1100 Contact: Paul Calderone www.xmultiple.com [email protected]

http://www.xmultiple.com/

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Xmultiple Technologies, Incorporated

Fast Facts

Headquarters Address 1060 Los Angeles Avenue, Simi Valley, CA 93065

Telephone

+ 1 805 579-1100

Fax

+ 1 805 579-7800

Website

www.xmultiple.com

Privately Held Company

XMULTIPLE

Number of Employees

5,500

Fiscal Year End

December

Revenue (in US$ million)

$85 million

SWOT Analysis

Strengths

Weaknesses

Worldwide Experience, Product Innovation, Global Presence

Dependence on Distributors

Strong Research and Development

Wide Range of Products

Opportunities

Threats

Entry into SFP and SFP+ Transceivers

Currency Fluctuations

Growing Connector Market

Pricing Pressures

Growing Consumer Electronics

Rising Material Cost

Operating Performance The company reported revenues of US$85.3 million during 2012, with a CAGR of 1.15% during 2008–2012. Its revenue grew at an annual rate of 24% over the previous fiscal year. In 2012, the company recorded an operating margin of 4.4%,

http://www.molex.com/

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XMULTIPLE SWOT Analysis

1. Business Analysis 1.1 Company Overview

Xmultiple Incorporated (Xmultiple ) is a US based manufacturer of electronic components. Xmultiple manufactures precision interface connectors and components. Xmultiple Technologies was formed specifically to develop interconnection solution products. Xmultiple has become a "Leading Source for Connector Innovation".

The connector product lines include RJ connectors, SATA/eSATA, SIM card connector, SD card connector, USB connector, HDMI connector, Headers, Ribbon connectors, RF connectors/convertors, Combo connectors, DC Power, AC Socket and RJ magnetic connectors with integrated components. Xmultiple's X-SMART connector series of products include combo connectors with RJ/MicroSD, USB/MicroSD, HDMI/MicroSD, eSata/MicroSD and more all used in Smartphones, Tablet computers, desktop, laptop, notebook, telecommunications equipment, networking equipment, video equipment, audio equipment, and many emerging mobile devices. Our component product lines include LAN modules, power inductors, common mode chokes, and emerging high speed transformers. The connector industry is a mature industry. The market size of global connector industry in 2012 was, up 30%. The market of desktop computer connectors is dominated by international large scale enterprises. Demand for advanced product features, high-speed, convenience, and connectivity is driving the connector manufacturing industry. The industry is forecast to reach an estimated US $60 billion in 2017 with a CAGR of 4.8% over the following years (2013-2017). The tablets and desktop computer market is providing growth momentum for connectors and components at a high volume level. Connectors are an important electronic component for a mobile phone, and their quality is directly related to the quality and reliability of the mobile phone. Connectors are widely applied in industries including automobile, computer, telecommunication, manufacture, consumer electronics, aviation and military industries. Xmultiple is a global manufacturer of connectivity products supporting all applications and requirements for all these industries. Xmultiple is headquartered in the United States with multiple manufacturing factories throughout Asia.

1.2 Business Description Xmultiple Incorporated (Xmultiple) is a leading provider of electronic connectors. The company engages designing, manufacturing, and selling of electronic products. Xmultiple ’s product portfolio includes terminals, connectors, planar cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical and electronic switches. Xmultiple has classified its operations under four reportable segments, including, Connector, Custom & Electrical, Consumer Products and Corporate & Other. During the fiscal year ended December 31, 2012, the company generated 70.2% of total revenues from Connector segment, 21.5% of total revenues from Custom & Electrical segment, 8.2% from Consumer Products and 0.1% of total revenues from Corporate & Other segment. The company serves various markets including telecommunication, data products, automotive, consumer, industrial, and other. In telecommunication market, the company provides optical products, RJ connectors, RF

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connectors, backplane connector systems, power distribution products, power cables and other cabling systems. These products find their applications in Mobile phones and devices, networking equipment, switches and transmission equipment.. Xmultiple sells its products to the Original Equipment Manufacturers, distributor’s contract and manufacturers. The significant customers of the company include Cisco, Arrow, Hewlett Packard, Dell, Ericsson, LG, IBM, Motorola and Nokia.

1.3 Major Products and Services Xmultiple Technologies Incorporated (Xmultiple) is a US based manufacturer of electronic connectors and components. The company’s key products and services include the following: Table 1: Major Products and Services

Table 1: Major Products and Services

Products:

Connectors (RJ, RF, Circular, Terminal, Board-to-Board,etc.)

Sockets

I/O Connectors

Cable Assemblies

Optical Fibers

Printed Circuit Products

Antenna Products

Power Products

Services:

Automation Services

Assembly Services

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2. Analysis of Key Performance Indicators

Table 2: Key Ratios - Annual

Key Ratios Unit/Currency 2013 2012 2011 2010 2007

Equity Ratios

EPS (Earnings per Share) US$ 1.02 -1.36 0.39 1.30

Dividend per Share US$ 0.47 0.58 0.42 0.30

Dividend Cover Absolute 2.29 -3.10 0.74 4.32

Book Value per Share US$ 10.74 10.92 11.15 13.71

Cash Value per Share US$ 2.74 2.49 2.33 2.06

Profitability Ratios

Gross Margin % 30.12 27.9642

30.85 31.13

Operating Margin % 8.32 -12.38 5.66 9.85

Net Profit Margin % 6.73 -11.45 4.21 7.37

Profit Markup % 40.38 38.25 40.95 45.20

PBIT Margin (Profit Before Interest & Tax) % 4.75 4.18 4.94

PBT Margin (Profit Before Tax) % 4.88 -11.24 10.98 10.36

Return on Equity % 3.56 -15.44 3.17 9.54

Return on Capital Employed % 5.71 -15.48 11.99 11.55

Return on Assets % 5.46 -10.69 3.52 7.26

Return on Fixed Assets % 4.86 -21.22 14.83 18.64

Return on Working Capital % 13.90 -34.99 24.51 30.34

Growth Ratios

Sales Growth % 22.35 -21.64 9.88 14.14

Operating Income Growth % -200.42 -3.93 3.81

EBITDA Growth % -181.90 -1.46 3.16

Net Income Growth % -257.62 -10.89 1.98

EPS Growth % -123.21 -8.59 5.73

Working Capital Growth % 39.02 -44.89 6.28 11.17

Cost Ratios

Operating Costs (% of Sales) % 85.66 115.29 80.27 90.15

Administration Costs (% of Sales) % 20.82 21.88 20.01 20.16

Interest Costs (% of Sales) % 0.17

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Key Ratios

Unit/Currency 2013 2012 2011 2010

Debt to Equity Ratio Absolute 0.12 0.11 0.11

Net Debt to Equity Absolute -0.02 -0.04 -0.09

Debt to Capital Ratio Absolute 0.12 0.11 0.08

Interest Coverage Ratio Absolute 24.07

Efficiency Ratios

Asset Turnover Absolute 0.89 0.85 0.90

Fixed Asset Turnover Absolute 2.81 2.45 2.89

Inventory Turnover Absolute 5.56 5.77 5.20

Current Asset Turnover Absolute 1.57 1.68 1.73

Capital Employed Turnover Absolute 1.49 1.40 1.35

Working Capital Turnover Absolute 3.35 4.04 2.95

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Key Financial Indicators 2.2.1 Revenue and Operating Profit

The company's consolidated group revenue for 2012 stood at US$85 million, which corresponds to a growth rate of 12% over the previous year. This could be attributed to the company’s strong competitive position, its superior portfolio of products and services, and the regular introduction of innovative products and services during 2012. The company's operating margin was 4.1% in 2012, with a slight increase over the previous year. The growth is a result of improving profitability, and implementation of cost saving measures.

2.2.2 Asset, and Liabilities

The company's capital expenditure in 2012, were 25% higher than that of the previous year. This higher capital expenditure indicates that the company has increased its investment in fixed assets or upgraded its existing infrastructure. The company's asset to liability ratio reduced from 2.1 in 2012.

2.2.2 Operational Efficiency There was a 3% decline in the company's working capital turnover for 2012 from the previous year's figure of 3.5%. This decline can be attributed to less effective working capital management or lower sales compared to the previous year. The company's inventory turnover ratio increased by 1% in 2012.

2.3 Key Competitors

The following companies are the major competitors of Xmultiple Incorporated: Amphenol Corporation Tyco Corporation Molex, Inc. Belfuse Corporation Pulse Engineering Hirose Electric Co., Ltd.

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SWOT Analysis - Overview Strengths

Xmultiple Technologies, Incorporated (XMULTIPLE) is engaged in manufacturing electronic, electrical, and fiber optic interconnection products and systems. Strong global presence, strong research and development and wide portfolio of offerings are the company’s key strengths. Xmultiple core competence includes design, tool making, molding, stamping, plating, assembling, back-up production facilities, and comprehensive quality management systems for connectors, cables and components. Xmultiple has the unique ability acquired from its founders to develop leading edge new products for interconnect solution requirements. The core competencies listed below provide Xmultiple with a competitive advantage. Design, Development and Innovation of Interconnect Solutions - Strong Research and Development

Xmultiple has years of professional production experience with interconnect solutions products manufacturing, procurement, and assembly. Including years of development of products with mechanical design, electronic design, and software design.

Worldwide Experience

Xmultiple works with contract manufactures worldwide supplying products on-time and expedited when required. Our experience in multinational businesses assures your company will be provided products when you need the products. Our sales people and sales channels will work with you closely to make sure we are forecasting your production and with stocking orders you will have products when you have your planned production.

Diversity and Multi-Culture

Our In-depth knowledge and experience of the different languages and cultures provides our customers and clients with worldwide service.

Multiple Production Back-Up Facilities For Each High Volume Level Customers Production

Most importantly, Xmultiple has backup production facilities for each of our high volume customer’s production. Xmultiple has the ability to quickly shift production and distribution needs to our production facilities in Taiwan, China and the United States. Some of the many back-up steps taken for our customers include the following:

a. Regular review of inventory levels and distribution locations. Inventory is positioned at alternate distribution centers and warehouses to prevent interruptions.

b. Back up production facilities located in Taiwan, China and USA.

c. Staging of materials in proximity to alternate production sites.

d. Preparation of key administrative and system functions to quickly produce customer products at alternate site if necessary.

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Xmultiple's Management/Employees Focus Is On Quality

Xmultiple management has implemented various levels of ISO procedures to ensure continual quality and improved procedures to maximize customer satisfaction. Xmultiple has deployed operational procedures in each of our factories to assure our products are the best in the industry.

Our Brand —How the Xmultiple's Name Impacts The Connector and Component Market

2013 marks the fourteenth year that Xmultiple has been providing innovation, manufacturing and market-leading interconnector solution products to small, midsized and large companies

Global Presence The company’s global presence helps it to reach a huge customer base, ensuring strong top line performance. Xmultiple is one of the largest manufacturers of electronic connectors in terms of revenues. The company has strong presence worldwide Wide Range of Product lines for Customer Needs The company’s wide portfolio of offerings helps it to mitigate the risk associated with limited portfolio of offerings. Xmultiple is a leading manufacturer of electronic connectors in terms of revenues. The company designs, manufactures and sells thousands of products.

Weaknesses

Dependence on Distributors

The company’s overdependence on distributors to sell its products may affect its business operations. The company generated 20% of total sales through independent distributors in the fiscal year 2012. Xmultiple depends on independent distributors to sell its products by signing written agreements. These agreements are nonexclusive and generally may be terminated by either party upon written notice. Also, these distributors are not within the company’s control and are not forced to purchase products from the company.

Opportunities Growing Connector Market The company stands to benefit from growing connector industry. The global connector industry had a compound annual growth rate (CAGR) of 5% over the past 25 years, and the industry is expected to grow by 20% in 2013. .

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Customer Growth

The company stands to benefit from the growing global consumer electronics market. The global consumer electronics market is set to witness phenomenal growth in the near future.. Entry Into SFP and SFP+ Transceivers

The company’s entry into SFP and SFP+ transceiver market is starting to provide additional revenue for the company. With Xmultiple’s entry into the SFP and SFP+ market, we have developed new patents for leading edge technology in this market.

Threats

Pricing Pressures The company facing risks related to decline in product price, which may affect its result of operations. The company is experiencing erosion in average product price. Xmultiple experienced average annual product price erosion to 3.9% from 3.5%. The company continues to reduce its cost, in order to maintain its margins. This decline in product price is due to increase in competition in the market. The market in which Xmultiple operates is a highly competitive. It principally faces risk from Amphenol Corporation, Hon Hai Precision Industry Co., Ltd, Molex, Pulse, Belfuse and Tyco Increases In Material Cost Commodity materials prices have increased our manufacturing cost in the past and there is fear this will happen again. This affects profit margins when it occurs. The shortage of certain commodity materials used to manufacture its products is also a possible issue in the future. Xmultiple uses plastic resins, gold, copper-based metal alloys which are especially affected by high demand. A shortage of these materials in the connector assemblies may affect the production process. Our focus is on on-time delivery of our products to our customers so we are purchasing higher levels of materials to assure we will not have a shortage of material even with a massive increase in product demands for the next three years. Prices of materials are continuously fluctuating, especially gold, which represented over 15% of the company’s total material cost in the fiscal year 2012. Fluctuation in Foreign Exchange Xmultiple is affected by fluctuations in foreign exchange rates. Xmultiple conducts its business operations in variety currencies worldwide. A major portion of its revenues are generated from Asian currencies. Xmultiple has risks from emerging market currencies. Currency fluctuations may cause the company to incur losses in the future, which may affect its results of operations.

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4 Xmultiple Technologies, Incorporated - Company Statement A statement by Mr. Alan Pocrass, Chief Executive Officer and Chief Operating Officer of Xmultiple Technologies, Incorporated is given below. Xmultiple made excellent progress in expanding and growth in the last two years. There has been a improvement in the economic climate in the last six months with job growth. Companies are reporting stronger revenue increases for the last twelve months as well. Xmultiple’s revenue benefits from strong performance across every major market Xmultiple serves. Strong Accomplishments During the Year Xmultiple had increase sales and a strong financial performance in 2012. We increase the size and amount of equipment in all our plants in 2012. We significantly expanded the amount of production in our manufacturing centers in Shenzhen, China. Xmultiple will continue to increase production capability. In addition, we are focused on product innovation and launching new products each year. Over 100 new products we launched in 2012. Significant potential growth drivers for Xmultiple. The future has strong momentum with the addition of many new customers in 2012. Xmultiple’s main emphasis in the upcoming years is on new product innovation. With new product innovation this assures our company of increased returns on our investments. Xmultiple added ISO14001:2004 compliance to our current ISO9001:2008 Certification in our headquarters and many of our manufacturing plants. This commitment to quality strengthens our internal processes for all our plants.

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5. Key Employees

Table 5: Xmultiple Incorporated, Key Employees Name

Title

Board Level

Since

Age

Alan L. Pocrass

Director - CEO

Executive Board

1999

64

Detty T. Tarczy

Director - President

Executive Board

1999

63

Lee Adams

Director, Senior Vice President - Technology Innovation

Executive Board 1999

60

Mike Basowski

V.P. - National Sales Manager

2005

53

Don Diamond

Vice President - Technology

2009

56

Paul Calderone

Director, Senior Vice President - Technology

2009

48

William Chang

General Manager- Taiwan Plant

2001

66

David Chen

GM-China Plant

2007

52

Charles Tartello

General Manager- LA

Custom Facility

2002

57

Collin Bonniface

European – Sales Manager

2005

58

Logon Qu China Sales Manager

2010

27

55

56

48

66

52

57

58

Marge Johnson Support Manager- LA Headquarters

2003

42

55

56

48

66

52

57

58

Frank Dragun V.P. - Marketing Manager

2005

60

55

56

48

66

52

57

58

Emrick Kollar V.P. Engineering

2001

43

55

56

48

66

52

57

58

Debra Bowling Purchasing Manager

2009

40

55

56

48

66

52

57

58

Todd Benenett V.P. Technical Support

2005

46

55

56

48

66

52

57

58

Michael Lin General Manager- China Plant

2011

52

55

56

48

66

52

57

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6. Xmultiple Technologies, Incorporated - History

1989 Xmultiple granted patent for RJ connectors with integrated LEDs (US 4,978,317 patent). 1994 Xmultiple signs agreements with major connector companies including Tyco/AMP and Amphenol for ‘317’ patent. 1995 Xmultiple implements RJ/LED connectors for licensees of ‘317’ patent with development of RJ connectors with LEDs as well as RJ connectors with and without integrated magnetic. 1999 Xmultiple formed divisions to directly manufacture interconnect solution products and establishes Taiwan factory. 1999 Pass the FCC verify. 1999 Joint-venture for assembling wire circuits with many Chinese and Taiwan connector manufacturers to manufacture RJ/LED connectors 1999 Xmultiple opens its own manufacturing plant in China to manufacture interconnect solution products. Oct 2000 Xmultiple releases the XRJAX product line of RJ style coaxial connectors. Jan 2001 Establish Mei-Yang manufacturing plant/factory in China. Jun 2001 Xmultiple files for patent for the UltraJAX connectors which has 16 to 20 contact pin and is one RJ connector which is capable of performing the function of two RJ connectors. Apr 2002 Xmultiple patent for modular manufacturing process filed. Jun 2003 $15m investment announced Flashpoint flash memory product for flash memory card and products. 2004 Pass the ISO9001:2008 Certification in all factories and headquarters. Oct 2005 Xmultiple releases FlashPoint flash memory copy remote product lines and chipsets. 2006 Advance the RoHS for all products. 2006 Establish Sony Yang China Factory Nov 2006 Xmultiple announces SensiKey electronic flash memory key with integrated fingerprint capability to replace traditional lock/key systems. Jul 2009 Xmultiple releases Power Charger Consumer Products Division products including the patent pending XP1Power cable for universal charging of electronic devices. 2009 Performance the no halogen process. Feb 2010 Xmultiple releases UltraJAX Plus RJ style connectors for harsh environment and for 10Gbase-T emerging applications. Oct 2011 Xmultiple releases UltraJAX high density connectors for LAN and computer applications. Jan 2012 Xmultiple releases low profile RJ connectors for laptop and LAN devices with requirements for space savings. Aug 2012 Xmultiple releases three (3) row Stackable RJ Connectors Jan 2013 Xmultiple releases RJ/MicroSD Card Combo Connectors April 2013 Xmultiple release USB/MicroSD Card Combo Connectors

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7. Xmultiple Locations and Subsidiaries

Xmultiple Technologies, Inc.

USA CHINA SINGAPORE

Corporate Office 1060 Los Angeles Avenue Simi Valley, CA 93065 Toll-free for US : 800-753-9526 Tel: 1-805-579-1100 Fax: 1-805-579-7800 USA Hours listed are Pacific time Hours listed are Greenwich Mean Time Monday-Friday: 8am - 5pm [email protected]

[email protected]

Call Toll Free- 1-800-753-9526 Pricing, configurations, services, and solutions

Xmultiple Technology, Inc. - China

HANKING Center 7E-022, Dengliang Rd #23,Nanshan District, Shenzhen, 518054 China Line 1:- +86(0)755 36677345 Line 2:- +86(0)755 26471051 Fax:- +86(0)755 86599695 *Callers from outside China,

please dial without the ¨0.〃

深圳市南山区登良路23号汉京国

际大厦7E-022

[email protected]

Xmultiple Technology, Inc. Singapore Email - [email protected]

UNITED KINGDOM AUSTRALIA TAIWAN

Xmultiple Technology, Inc. Europe International: +44(0)208668 6660 [email protected]

Xmultiple Technology, Inc. Australia Email - [email protected]

Xmultiple Technology, Inc. Taiwan Email - [email protected]

MEXICO CANADA INDIA

Xmultiple Technology, Inc. Mexico Email - [email protected]

Xmultiple Technology, Inc. Canada Email - [email protected]

Xmultiple Technology, Inc. India Email - [email protected]

mailto:[email protected]










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8. Appendix Xmultiple reports are based on a core set of research techniques which ensure the best possible level of quality and accuracy of data. The key sources used include: Company Websites Company Annual Reports

State Filings

Press Releases

Proprietary Databases Notes Financial information of the company is taken from the most recently published annual reports.

The financial and operational data reported for the company is as per the industry defined standards

Revenue converted to US$ at average annual conversion rate as of fiscal year end

Disclaimer

All Rights Reserved

This document has been prepared solely for information purposes for the use of the recipient and without any commitment or responsibility on our part. Xmultiple Technologies, Inc. accepts no liability for any direct or consequential loss arising from the transmission of this information to third parties. This report is current at the date of writing only and we will not be responsible for informing you of any future changes in circumstances which may affect the accuracy of the information contained in this report. Xmultiple Technologies, Inc. does not offer or hold itself out as offering any advice relating to taxation, legal or regulatory implications. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Xmultiple Technologies, Inc. Xmultiple can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

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Revisions

Revision Date Section Paragraph Summary of change Authorized by

A 1/10/12 Initial issue MB

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