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Knowles (KN) Realigns Segments for Improved Transparency

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Knowles Corporation (KN - Free Report) has restructured its operating segments for improved transparency within the organization. The new business segments are likely to better align with its corporate strategy and will take shape in the fourth quarter of 2022.  

While keeping the Precision Devices segment unchanged, Knowles has formed two new segments from the erstwhile Audio and renamed them MedTech & Specialty Audio and Consumer MEMS Microphones. The Precision Devices segment will continue to design and deliver highly engineered capacitors, filters and radio frequency devices for technically demanding applications. These products are mostly used in power supplies, radar, medical implants and satellites, serving the industrial, defense, aerospace, medical, telecommunications and automotive markets.

The MedTech & Specialty Audio segment will design and manufacture microphones and balanced armature speakers for the hearing health and premium audio markets. The Consumer MEMS Microphones will design and manufacture micro-electro-mechanical systems (MEMS) microphones and audio solutions for IoT, computing and smartphone markets.

Voice-powered interactions are fast emerging as a critical and necessary feature as consumers tend to engage with technology through natural, spoken commands across mobile, ear and IoT platforms. This has led to a wide proliferation of products, ranging from mobile phones to headsets and smart speakers to household appliances. Knowles aims to capitalize on its unique capabilities in acoustics, digital signal processing and algorithms to cater to these demands.

The acquisition of Audience further helped the company gain essential digital signal processing and algorithm capabilities. Strong business focus, disciplined capital management, and continuous R&D (research & development) initiatives have helped Knowles to command a leading market position in MEMS microphones, balanced armature speakers, edge processors, high-performance capacitors and radiofrequency filtering solutions. MEMS microphones are the smallest of their kind, with the highest signal-to-noise ratio at the lowest power, while the balanced armature speakers offer the greatest output at the lowest power.

Proprietary manufacturing techniques and global scale of operations have facilitated the company to fine-tune its business with evolving customer demands and invest in high-value solutions. The transformation from an acoustic component supplier to an audio solutions provider has enabled the company to migrate to higher-value solutions and increase content per device. This, in turn, has empowered it to capitalize on the positive macro trends in audio and edge processing solutions.

Knowles boasts an integrated design and manufacturing scale of operations. The company has a unique ability to balance and shift between full and semi-automation to optimize the efficiency of operations and reduce operating expenses. For products that were introduced more than 18 months ago, Knowles strives to offset the expected price erosion through bill of material cost reductions, yield improvements, equipment efficiency and movement to lower-cost manufacturing locations.

The stock has lost 32.7% in the past year compared with the industry’s decline of 13.6%.

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Knowles currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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