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Synaptics (ticker: SYNA), maker of the Apple iPod's scrollwheel and touchpad products for PCs and other MP3 players, reported fiscal fourth quarter results yesterday. While last quarter was on target, the company guided next quarter's sales down 9-10%, triggering a 25% drop in its stock. The lowered guidance was the second straight quarter of lower forward revenue guidance delivered by Synaptics (see summary of SYNA F3Q05 conf. call).

CFO Russ Knittel explained the expected weakness, and lower visibility in general, in the conference call - excerpted below:

Based on current visibility, we expect revenue in the September quarter to be down approximately 9% to 10% from the June quarter. This outlook anticipates seasonal growth in the notebook market, but weighted towards lower end consumer notebooks and reduced visibility in the hard disk drive MP3 player market…

As you know, our pattern in the past has been to give directional guidance for the next quarter out, which in this case, would be our December quarter. Given the continued uncertainty regarding certain customer-specific dynamics, we do not feel comfortable providing definitive guidance related to our extended outlook. However, as we did last quarter, we would like to share our current internal view for the December quarter which, given our limited visibility, results in an unusually broad range with revenues of $40 million to $50 million. Looking beyond the December quarter... our current view suggests that our revenue for fiscal 2006 may be off approximately 10% from fiscal 2005's record levels.

In the Q&A, Kingsford Capital analyst David Alley said he was 'a little bit in shellshock' from the company's sharp downward guidance. Synaptics CEO Francis Lee tried to end on a positive note:

we believe that FY '06 notwithstanding, some of the uncertainties given the customer, still represent a very bright future for the Company.

(Quotes are from the CCBN StreetEvents transcript.)

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Source: Synaptics CFO Explains Weak Forward Guidance (SYNA F4Q05 Conf Call Quotes)