Comtech Tapping U.S. Market

Comtech Group COGO may not be a household name in China, but it has built up a solid business behind the scenes. The company designs parts that go into cell phones and other consumer electronics for some 200 manufacturers, mostly in China.

Telecom and handset sales account for more than 70% of its sales; digital media makes up the rest. It's been keeping busy expanding in the latter segment.

Last year, Comtech signed a licensing deal with Microsoft MSFT, which should help grow its business in the U.S. Comtech will use the software giant's source code to help design consumer electronics like digital music players, GPS handhelds, set-top boxes and video game consoles.

Its telecom and handset business continues to grow as well. So far this year the Comtech has landed two contracts, one from Chinese mobile phone maker TCL Corp. and the other from telecom and network solutions provider Zhong King Telecommunications Equipment .

The company's sales growth has held steady, rising at least 44% the past six quarters. Profit growth has been a bit spottier, ranging from 14% to 75% during those periods.

Comtech recently beat fourth-quarter earnings estimates by a penny a share and raised its 2007 profit outlook by 2 cents a share.

Copyright 2007 Investor's Business Daily, Inc.