Glenview Capital and Teradyne
Glenview Capital Management, Larry Robbins’ hedge fund, increased its stake in Teradyne, Inc. (TER) in November 2014. According to Glenview Capital’s 13G filing in November, the fund increased its position in Teradyne by 4 million shares from its 3Q14 position to nearly 12 million shares. This means Glenview Capital now has 5.53% of Teradyne’s total shares outstanding.
Teradyne: An overview
Teradyne, Inc. (TER) designs, manufactures, and sells automatic test systems and solutions to test semiconductors, wireless products, hard drives, and circuit boards. The company has a broad customer base, including integrated semiconductor manufacturers (or ISMs), outsourced semiconductor assembly and test providers (or OSATs), wafer foundries, fabless designers, developers of wireless device and consumer electronics, circuit board manufacturers, automotive suppliers, storage device manufacturers, and aerospace and military contractors.
Teradyne categorizes its operations into the following three segments for financial reporting purposes: semiconductor test segment, wireless test segment, and systems test segment. Let’s take a closer look at these segments.
Three business segments
Teradyne’s semiconductor test segment has always been the core of Teradyne’s operations. It accounted for 71% of the $1.4 billion turnover in fiscal year 2013. Semiconductor devices have a broad range of applications, from low-cost devices such as voltage regulators to complex digital signal processors, microprocessors, and high-density and high-speed memory devices. Its main competitors in this segment are Advantest Corporation (ATE) and Xcerra Corporation (XCRA).
Teradyne’s wireless test segment accounts for 18% of the company’s revenues. The segment provides test equipment for smartphones, tablets, notebooks, PCs (personal computers), and other cellular-enabled services. This segment was established after the company’s acquisition of LitePoint in October 2011. Competitors in this segment include National Instruments (NI) and Agilent Technologies (A).
The company’s system test segment, which accounts for 11% of Teradyne’s revenues, provides high performance test systems for the U.S. Department of Defense, storage test requirements to hard drive manufacturers, and testing assembly and operational ability of printed circuit boards to electronics manufacturers. Teradyne’s competitors in this segment are Agilent Technologies (A) and Xyratex (XRTX).