MIDAS SHARE TIPS: Well-connected Laird looks to cash in with new car, health and tourism tech as mobile sales start to fall
Forecasters have been predicting a slowdown in the smartphone market for months and at the beginning of this year, Apple chief executive Tim Cook admitted that he expects iPhone sales to fall in the three months to March. If true, this would be the first decline since the phone was launched nearly nine years ago.
Such predictions do little for Laird, the British electronics company whose single biggest customer is Apple. Over the past year, its shares have slipped back from a peak of 400p to 332¾p today, but the fall is overdone and the stock should bounce back.
Laird chief executive David Lockwood unveils 2015 results later this week and some of the City’s more thoughtful analysts expect the company to deliver a near 9 per cent increase in revenues to £631 million, a 14.5 per cent rise in profits to £72.4 million and a 5 per cent hike in the dividend to 12.5p.
Tuned in: Laird is making antennae for the Rio Olympics
That is in a year when smartphone sales have been under pressure.
A number of reasons lie behind the group’s resilience. First, Laird is not just about smartphones. The business makes materials that protect electronic components from heat and electromagnetic interference, so that gadgets such as iPhones do not burn users or give them electric shocks. Apple and Samsung are big customers, but they are not the only ones.
Laird also provides materials used in the roll-out of 4G and 5G telecoms networks and it works with a range of industries, such as vehicle manufacturers, medical equipment makers and consumer goods firms.
In the US, for example, many hospitals offer creche services so that new mothers can sleep at night. To ensure that the right baby is given to the right mother in the morning, both are given special electronic ID wristbands designed by Laird.
The group also provides materials used in CT scanners and other sophisticated medical kit and Lockwood is keen to develop this side of the business.
Decline? Apple boss Tim Cook may see iPhone sales slide
Laird also designs antennae that enable wi-fi internet to work. Its aerials are on the Empire State Building in New York so that tourists can use the internet while admiring the view. The group was responsible for the antennae at the London Olympics and it has just been commissioned to do the same job at the forthcoming Olympics in Rio de Janeiro.
Some of Laird’s biggest customers are car makers, such as Jaguar Land Rover, Mercedes-Benz, Ford and BMW, as the group supplies aerials that allow drivers to use digital radio, satellite navigation and blue-tooth technology.
‘Smart’ cars are all the rage and the number of available technologies is only likely to increase, as more vehicles become equipped with facilities such as assisted parking, automatic emergency braking and cruise control.
Laird is also likely to benefit from the ‘internet of things’ – essentially the increased use of wireless technology to make life safer, easier and more efficient.
Tall order: Laird has aerials on the Empire State Building
The group already supplies hospitals with kit that allows staff to monitor drips electronically. It supplies industrial vending machines with technology that shows when a certain number of products have been sold and may need to be replenished.
It provides exceptionally robust antennae used by police vehicles, ambulances and huge agricultural vehicles. And it works with a variety of industrial and commercial customers, providing wi-fi connectivity for everything from teleconferencing in offices to sophisticated machine monitoring in high-tech manufacturing sites.
In 2015, 4.9 billion devices were connected to the internet and that figure is expected to reach 25 billion by 2020. Laird is at the heart of this digital explosion and Lockwood is determined to reap the benefits, remaining in the vanguard of technological development and ensuring that the company retains its reputation for quality.
Midas verdict: Slowing iPhone sales and concerns about economic prospects globally have hit Laird shares, but the company is well positioned to take advantage of the growth in smart car technology and broader demand for internet connectivity everywhere. Buy now and be patient.
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