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A thermal spray process has been developed for the deposition of ferrites and highly anisotropic composites of magnetic alloys and ferrites. The critical volume fraction for conduction is at 5 to 10 volumetric percent (vol.%) metal in these thick films as compared to 33 vol.% in isotropic mixtures of spheroidal particles. The low percolation threshold and highly anisotropic transport properties are associated with the unusual microstructure of thermal spray coatings which are composed of lamellar splats stacked one upon the other. By varying the volume fraction of metal in these composites it is possible to drastically change the electrical, magnetic and mechanical properties of these coatings. In the sintered mixture the conductivity increases rapidly when the metal volume fraction reaches about 33 vol.% whereas in the thermal spray coating the conductivity increase occurs at metal fractions of about 2-6 vol.%. The magnetoresistance was measured in the parallel, perpendicular and transverse geometry in each case in fields up to 2 kilogauss. There is a clear and sharp transition from giant magnetoresistance (GMR) (negative ΔR/R) to anisotropic magnetoresistance (AMR) at the percolation threshold in both cases. These results show that the GMR comes from the scattering of weakly exchange coupled spins in the polycrystalline ferrite which can be aligned in high fields decreasing the resistance. The AMR is in the conductive metallic phase and its field dependence is mainly controlled by the shape anisotropy of the disk shaped splats as expected.