TE Connectivity Ltd Earnings Call Insights: Automotive Segment and Cost Profile

TE Connectivity Ltd (NYSE:TEL) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Automotive Segment

Amit Daryanani – RBC Capital Markets: Just a question I guess on the Automotive segment. If you could maybe talk about the softness that you saw in the December quarter specifically in EMEA, this was more demand driven or do you think there is a inventory correction that is occurring over there that could persist over the next couple of quarters specially related to dealer registered vehicles if you may? Maybe if you just talked about that part of the business and the inventory correction that will be helpful.

Thomas J. Lynch – CEO: Sure. I think in the Automotive piece it’s more demand driven, Amit. So your point about the low new registrations that’s also a little bit by the fact that the high end half the cars there are being exported to the parts of world where in China and the U.S. where the economies are picking up again. We didn’t see too much inventory. I think inventory in the auto chain, value chain, or supply chain is in good shape. We did see some inventory corrections, the last couple of quarters in the industrial vehicle market. But now we are starting to see that turnaround. So I would say that’s how I would summarize it.

Amit Daryanani – RBC Capital Markets: So the expectation would be that that segment or Automotive in general should improve as you go forward through fiscal ’13, right, on a revenue basis?

Thomas J. Lynch – CEO: Yes.