A refresher: Xilinx last night lowered its guidance for the September quarter, and now expects revenue to drop 4%-7% sequentially from the June quarter, rather the previously expected flat-to-down 5%. The company blamed weaker-than-expected sales in the Asia-Pacific region.
So, uh, why is the stock rising? I went poring through a big pile of Xilinx research from this morning seeking an answer. What I found was that no one seemed surprised by the reduced outlook, and no one has really changed their opinions. The bulls are still bullish, the skeptics still skeptical. Some excerpts:
* Satya Chillara, Pacific Growth: As previewed, we thought there was a chance that guidance could be lowered; however, this does not change our valuation and rating bias….believe that in the December quarter revenue should snap back and demonstrate a sequential increase of 2%-4%. Rating: Buy.
* Joe Osha, Merrill Lynch: Shortfall is largely attributed to the weakness in the communications end-market, with both wireless and wireline performing worse than expected…we believe wireless infrastructure is the main culprit…The company has not made adjustments to wafer starts as it believes orders for the December and March quarters are good. Rating: Neutral.
* Tim Luke, Lehman: While we see support [for the stock] at current levels, we see few near-term catalysts in this back-end loaded quarter. Rating: Equal Weight
* Michael Masdea, Credit Suisse: We maintain our concerns about the PLD [programmable logic device] sector owing to low embedded IP and cost structures and maintain our Neutral rating.
* Mark Lipacis, Prudential: We think elevated inventory levels at EMS [electronics manufacturing services, also known as contract manufacturers] may have negatively impacted XLNX orders. We believe that elevated inventory levels pose a risk for semiconductor stocks in general, and for those companies exposed to the communications infrastructure supply chain specifically…We remain Underweight the stock due to elevated inventory levels at EMS players, as well as consolidation of OEM and service providers in the communication supply chain.
* Christopher Danely, J.P. Morgan: Despite the lowered guidance, we reiterate our Overweight recommendation…we would note that the stock has bottomed during the September quarter in four of the last five years…superior business model, high sustainable margins and attractive valuation.
Well, ok, I still can’t quite explain the stock’s rise; but it certainly seems like a positive sign regarding the Street’s sentiment on semiconductor stocks. Xilinx shares today gained 87 cents to $22.41.