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Knowles Boosts Sensor Solutions With ams AG Asset Buyout

Zacks Equity Research

Knowles Corporation KN recently announced the acquisition of MEMS (micro-electro-mechanical systems) microphone Application Specific Integrated Circuit (ASIC) design assets from ams AG. The buyout is expected to help develop avant-garde sensor solutions by leveraging Knowles’ strong foothold in mobile, ear, and IoT applications.

ams AG is an Austrian company, which specializes in the design and manufacture of innovative sensor solutions for applications requiring multi-sensor integration. Serving more than 8,000 customers, the company operates in 17 design centers across Europe, Asia and the United States. It has three focus areas — Optical, Audio and Imaging — which provide industry-leading power-sensor solutions to the communications, industrial and automotive markets.

The deal comprises the right to obtain ASIC parts, intellectual property and the integration of ASIC design team in Switzerland. The transaction, which has already been closed at a valuation of $58 million, is expected to be accretive to Knowles’ adjusted earnings in first-quarter 2020.

Notably, the company remains focused on capitalizing on the positive macro trends in audio and edge processing solutions. Proprietary manufacturing techniques, rigorous testing and global scale of operations have eased Knowles to tune its business with the evolving customer demands and invest in high-value solutions to diversify its revenues and increase exposure to high-growth markets.

Knowles has integrated design and manufacturing scale of operations that enable it to have flexibility and quick time-to-market schedule to meet clients’ requirements. The company has a unique ability to balance and shift between full and semi-automation to optimize the efficiency of operations and slash operating expenses. It strives to offset the expected price erosion through material-cost reductions, yield improvements, equipment efficiency and movement to lower-cost manufacturing locations. This augurs well for the company’s long-term growth.

Knowles has a long-term earnings growth expectation of 10%. The stock has rallied 62.9% compared with the industry’s rise of 15.8% in the year-to-date period.



Zacks Rank & Stocks to Consider

Knowles currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry are SeaChange International, Inc. SEAC, Ooma, Inc. OOMA and Acacia Communications, Inc. ACIA. While SeaChange sports a Zacks Rank #1 (Strong Buy), Ooma and Acacia carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaChange has a long-term earnings expectation of 10%.

Ooma has a long-term earnings expectation of 47.7%.

Acacia has a long-term earnings expectation of 30%.    

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