What's in a name? Less than there used to be for some automotive parts makers.
When Delphi Automotive Systems Corp. dropped ``Automotive Systems'' from its name and became Delphi Corp. on March 15, it followed a growing trend. Two years ago, Borg-Warner Automotive Inc. became BorgWarner Inc. Visteon Corp. was known as Visteon Automotive Systems before its 2000 spinoff from Ford Motor Co.
Others quietly have distanced themselves from the automotive sector, even though they're still building auto parts.
There is good reason to think about dropping the automotive moniker: It doesn't lure investors. After all, two suppliers whose stocks have performed well despite the sector's financial woes-mirror maker Gentex Corp. and original equipment wheel maker Superior Industries International Inc.-have names that give no hint of their auto roots.
Delphi's name change was not a ploy to convince investors that the company isn't an auto parts supplier, insisted spokesman Brad Jackson. ``Auto is still our core business,'' he said.
Delphi is eager to explore non-auto markets, including aerospace, medical, computers, entertainment and commercial vehicles, Mr. Jackson said. The name change was made ``to enable us to better market our technologies in new markets.''
Fish and livestock?
To be sure, anybody who looks beyond the name is not likely to mistake Delphi for anything but an auto parts company. Just about 2.1 percent of Delphi's $26.1 billion in annual sales last year, or $556 million, are from nonautomotive markets.
But consultant Dennis Virag has another take on the trend: ``The more you distance yourself from being strictly an automotive supplier, the potential for moving up in terms of (stock) valuation is greater.''
Automotive suppliers as a group, he said, rank below the fish and livestock sector on stock valuation as measured by a ratio of share price to annual earnings. The lower the price-earnings ratio, the less investors are willing to pay for a company's earning power. Stocks with low ratios tend to be in low-growth or mature industries-such as auto parts.
``Investors are turned off on the automotive sector because of the high capital costs and the lower return,'' said Mr. Virag, president of the Automotive Consulting Group in Ann Arbor, Mich.
SPX, nee Piston Ring
After moving up the valuation ladder, SPX Corp. is loath even to discuss its automotive business. The Muskegon, Mich., manufacturer once was known as Piston Ring Co.
Asked recently for SPX's annual automotive sales, Charles Bowman, director of corporate finance, declined to discuss the issue. SPX, he explained, has tried hard to attract a Wall Street following among analysts in nonautomotive sectors, and he doesn't want to spoil that.
The ``automotive'' name also was dropped late last year by the former Cherry Automotive unit, a supplier of automotive switches and sensors. The name vanished when Cherry's parent merged the automotive unit with the company's electrical products group.
Asked about the change, a spokeswoman for Cherry Corp. of Waukegan, Ill., said the reason was pretty basic: ``The automotive division was losing too much money.''