Earnings Preview: Synaptics

Synaptics (SYNA) is expected to report Q4 earnings Thursday, July 31 after market close with a conference call scheduled for 5pm ET.

Guidance

The consensus estimate is 42c for EPS and $92.78M for revenue, according to First Call.

Analyst Views

Thomas Weisel expects Synaptics to report earnings in line with Street expectations. Guidance was for revenue of $90M to $95M, up 14% to up 21% QoQ, versus Weisel's estimate of $92.5M. Weisel's non-GAAP EPS estimate is 39c, based on their conservative gross margin projection. The firm believes the company's notebook business remains on track, with incremental contribution from mobile. Going forward, for Q1, Weisel expects Synaptics to guide better than expectations. Guidance was for revenue of $100M to $106M, up 8% to up 14% QoQ. Consensus estimates are: $103.4M and 59c. Weisel said that the gross margin could perform ahead of its conservative 40% estimate on higher OneTouch shipment. In the firm's opinion, the quarter is likely to see increased contribution from handsets as design wins continue to ramp. Weisel also expects sequential growth to be driven by seasonality in all verticals, handsets, notebooks, with incremental contribution from portable media players (PMP). Weisel believes the touch solutions for smartphones remains the big theme in 2H08, and that Synaptics has already worked with every major OEM.

Oppenheimer recently said, "Checks indicate Synaptics is well-positioned with Samsung, Nokia (NOK) and Research In Motion (RIMM), and is likely to get more than its fair share of wins as these players begin to adopt capacitive touch in the coming few quarters."

Lastly, recall that last quarter the company indicated it would no longer provide two-quarter guidance.

Comments

[Fred J.:]

Interesting to note that non-GAAP earnings "growth" over the last year was due entirely to share buybacks. profit margin is clearly declining at about the same rate that revs are increasing. would have earned 0.38 this quarter without the share buybacks. dollar value of earnings were $10.7 million as compared to $10 million in the comparable quarter last year. GAAP numbers are much worse, of course. Management is employing a variety of tricks in order to prop the share price up, including the buybacks and the 3/2 split at these share levels. While revs are increasing, competition is no doubt increasing, and companies such as Apple are increasingly employing in-house and cheaper click/touch/scroll wheels in their products.

2008 Aug 02 12:30 PM