I am willing to walk away at the very last moment, if I have to, if something we find is not to our liking. We’ll always pay a reasonable price, a fair price for great companies. We may not always be the highest priced buyer, but I think we are often the best buyer because of our effectiveness, our willingness to work aggressively to get things done. And the fact is our organizational structure allows those newly acquired companies to become part of Amphenol in a very unobtrusive fashion. They joined seamlessly. They come in and on day one. They just keep operating like they were doing on all the days before. And that is a relatively low-risk approach to acquisition, because we’re not going in and just over — just sort of having these kind of convulsive restructurings of the company, where you run the risk of destroying what you didn’t even know you had.
So we look forward to continuing to have great acquisitions in the future, but we’re not going to be a kind of a system-level company. We know what we are. We’re an interconnect company. There are wonderful opportunities for interconnect products to be expanded, both organically and through acquisition going forward, lots of really attractive companies out there, and we’ll continue to position ourselves so the ones that match with us, the ones that go through our really rigorous kind of Rubicon of deciding whether or not to buy them, we’ll be in a good position to execute on those over the near, medium and long term.
Operator: And our next call is Chris Snyder with UBS. You may go ahead.
Chris Snyder: Thank you. I wanted to follow up on some of the earlier conversation on AI. So it sounds like book-to-bill for AI moderated sequentially, maybe after some early outsized orders just given the company’s foundation in that market. So I guess the question is, do you think that this moderation is a single quarter phenomenon? Or would you expect that to persist for multiple quarters? Because it does seem like the top line is still continuing to grow sequentially? Thank you.
Adam Norwitt: Thanks very much, Chris. Yes. I mean, look, I don’t usually talk about book-to-bill by submarkets. But I will tell you that, for sure, I mean, we had very strong bookings in AI-related applications in Q2 and Q3. And so it’s not surprising that here in Q4, our IT Datacom book-to-bill was a bit below zero and — sorry, a bit below one and because of those significant orders that we received, which customers wanted to place because they need the product and then we’re executing upon those orders. And yes, I think that our IT Datacom business is in a good position looking forward. I mean our guidance for the first quarter is to have a little moderation, which is not abnormal this time of year, actually quite normal. Let me say that. And layered on top of that, I think the AI is a good thing to have. So no, I think you characterized it quite well.
Operator: Our next call is Joseph Giordano with TD Cowen. You may go ahead.
Unidentified Analyst: Hi, guys. This is Michael on for Joe. So earlier, you had mentioned commentary regarding orders and specific markets. Can you just provide like a high level, maybe book-to-bill on a consolidated basis for the quarter? Or any color there?
Craig Lampo: About earlier that our book-to-bill was 0.95:1 for the quarter. Operator do we have another question.
Operator: Our next caller is Steven Fox with Fox Advisors. You may go ahead.
Steven Fox: Hi, good afternoon. I guess broadly speaking, the latest round of acquisitions were around sensors, antennas and assemblies I was just curious, like, Adam, your updated thoughts on your M&A focus by technology, especially in the context of what looks like gross margins that are now at the 33% level. I guess some of these products have lower gross margins, some have higher. I don’t know if there’s a mix impact that’s influencing the gross margin now with the M&A. But just broadly speaking, when you — the general buckets of technology that you look at, what is your thinking of what you’ve done and where you need to go now? Thanks.
Adam Norwitt: Well, thanks very much, Steve. Yes. I mean, look, in the quarter, we acquired companies who make sensors, antennas, cable and cable assemblies and really high-technology cable actually that has really great value for its customers. And we continue to see acquisition opportunities across really all of our interconnect products from discrete connectors to cable assembly, value-add, complex value-add interconnect products sensors, complex sensor interconnect assemblies, antennas and the like. And we’re really pleased to continue to find companies across all of those products. I wouldn’t tell you that we think so much about gross margin by product. We see great margin opportunities as you know. And Craig has said it so many times, we’re very much focused on operating margins.
And yes, I mean, some of these companies do operate below our corporate average, not all of them, by the way, but some of them do. And I think we — that doesn’t relate at all to their product type. We don’t believe that there is a correlation between whether someone makes a connector, a sensor and antenna a cable or a cable assembly that, that is necessarily going to put them in a certain bucket of profit potential. We actually see great profit potential for all companies. And that’s one of the ways we screen for acquisitions. I mean we’re not going to buy a company if we don’t see the long-term potential for that company to elevate its profitability to at or above our corporate average. Now, we do have industry-leading margins and so most of the companies that we do acquire tend to be lower than we are.
And then it’s our job and their job becoming part of the Amphenol family to bring those margins up over time. But it’s really not at all correlated to the type of products that they sell.
Operator: And our last question comes from Matt Sheerin with Stifel. You may go ahead.
Matt Sheerin: Yes. Thank you. Good afternoon. Adam, in your commentary on mobile devices, you mentioned that tablets and notebook PCs continue to be weak. But we are hearing some chatter about expectations for a potential refresh PC refresh cycle playing out in the next year or two. So wondering if you have any visibility into that? And can you give us a sense of the content opportunity for Amphenol within notebooks, particularly in the next-generation so-called AI-enabled PCs?
Adam Norwitt: Great. Thanks so much, Matt. Look, I hope what you say is the case. We certainly hope that there is a refresh. Look, I think we’ve talked about this year and even a little bit last year, that the strength that we’ve seen in phones this year, which was more than offset, in particular, by things like laptops and tablets. It had to do with the clear fact that during the pandemic and when everybody went to work from home and study from home, there was an enormous rush to buy new devices, which caused a surge and really kind of upset the normal replacement cycle of those products. And so I guess that one could expect that if everybody bought a bunch of stuff in 2020 and 2021 and if those things tend to last three, four, five years, that eventually you would hope to see a little bit of a refresh.
