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Fri, Jan. 29, 3:27 PM
- Several Apple suppliers are seeing major gains after iPhone power amplifier supplier Skyworks (SWKS +5.5%) and iPhone LCD driver IC supplier Synaptics (SYNA +10.6%) delivered their calendar Q4 reports yesterday afternoon - Skyworks beat estimates, while Synaptics (initially lower) missed on sales and beat on EPS.
- Both companies provided soft Q1 guidance (I, II) - Synaptics also suggested it's seeing weakness at multiple top smartphone OEMs . But with nearly every other iPhone supplier to have reported (not to mention Apple itself) having also guided light, shares are rallying nonetheless.
- Big gainers include mobile DRAM supplier Micron (MU +11.1%), microphone supplier Knowles (KN +11.2%), motion sensor supplier InvenSense (INVN +7.5%), audio codec chip supplier Cirrus Logic (CRUS +6.6%), NFC chip/motion co-processor supplier NXP (NXPI +5.9%), and RF chip suppliers/Skyworks rivals Qorvo (QRVO +6.8%) and Avago (AVGO +5.6%). The Nasdaq is up 1.8%.
- Micron could also be getting a lift from the market-pleasing reports delivered by hard drive giants Seagate and Western Digital, given Micron is exposed to many of the same end-markets as Seagate/Western.
Cirrus Logic is adding to the big Thursday gains seen after the company provided encouraging FY17 comments in its FQ3 earnings call. InvenSense has more than recovered the Thursday losses seen after the company provided soft FQ4 guidance and suggested it had lost share at Samsung.
- Possibly helping Synaptics out: When asked about M&A reports on the earnings call, CEO Rick Bergman didn't quite shoot them down. "[W]e're not going to comment on rumors or market speculation ... at the end of the day it is our job to maximize shareholder value so we'll listen to any great ideas that can do that and evaluate them appropriately."
Meanwhile, Bergman asserted Synaptics' TDDI (integrated touch controller/display driver) sales are due to ramp strongly thanks to numerous design wins at top LCD panel makers, and that its ClearForce pressure-response tech will be "a significant differentiator" for Synaptics' TDDI offerings.
Thu, Jan. 28, 5:21 PM
- Skyworks (NASDAQ:SWKS) FQ1 beat is accompanied by guidance for FQ2 revenue of $775M and EPS of $1.24, below a consensus of $817.8M and $1.33. However, with Apple having issued light calendar Q1 guidance and many fellow iPhone suppliers (including rival Qorvo) having warned and/or issued soft guidance, the outlook is being taken in stride.
- FQ1 details: Margin gains continue boosting EPS: Non-GAAP gross margin rose 470 bps Y/Y to 51.4%. FQ2 GM guidance is at 50.5%-51%. GAAP operating expenses rose 12% Y/Y to $141.6M. Skyworks ended FQ1 with over $1.2B in cash and no debt.
New non-mobile design wins included Volkswagen telematics systems, GM vehicle-to-vehicle communications sockets, Google's Chromecast HDMI stick and Nest security cameras, and Roku set-tops.
- Qorvo (NASDAQ:QRVO) is up 2.3% after hours. Avago (NASDAQ:AVGO) is up 1.3%.
- Skyworks' FQ1 results, earnings release
Wed, Jan. 27, 10:24 AM
- Along with its Q4 results, Q1 guidance, and restructuring plans, STMicroelectronics (STM +4%) says it's cutting 1,400 jobs - 430 in France through a voluntary departure plan, 670 in Asia, and 120 in the U.S. The company expects $170M/year in savings and $170M in restructuring costs.
- Along with the job cuts, STMicro says it's discontinuing "the development of new platforms and standard products" for its set-top and home gateway IC lines. 600 employees will be redployed from the company's set-top chip ops to "support principally ST's growth ambitions in digital automotive and microcontrollers."
- STMicro: "The slower than expected market adoption of leading-edge products and increasing competition on low-end [set-top] boxes, combined with the required high level of R&D investment, has led this business to generate significant losses in the course of the last years." Broadcom (BRCM -0.1%), which is due to officially be acquired by Avago (AVGO -3.1%) on Feb. 1, has been STMicro's top rival in the set-top/home gateway IC space, and stands to benefit from STMicro's move.
- The French government has responded to the news by stating STMicro needs a new strategy. Spokesman Stephane Le Foll: "We want a new strategy put in place to allow this company to create value and recover."
- STMicro continues trading higher post-earnings. Avago is joining other iPhone/iPad suppliers in selling off following Apple's earnings/guidance. the Nasdaq is down 1.2%.
Wed, Jan. 13, 6:57 PM
- Avago's (NASDAQ:AVGO) selloff following news Qualcomm (NASDAQ:QCOM) is forming a major RF filter and front-end module JV with Japanese filter maker TDK spells a buying opportunity, argues MKM's Ian Ing. He reiterates a Buy and $163 target.
- Ing: "For RF incumbents, the silver linings are: (1) TDK Epcos has less filter design iterations and manufacturing experience, likely resulting in good but not great products; (2) barring superior products, big OEM customers will likely be reluctant to decrease supplier diversity and concentrate more content with QCOM; and (3) using QRVO as a proxy, the RF360 JV likely won’t be producing integrated, jointly developed products until 18-24 months from now."
- Likewise, though he calls the JV a "credible threat" in the future, Raymond James' Tavis McCourt doesn't see a major near-term threat to Avago, Skyworks (NASDAQ:SWKS), or Qorvo (NASDAQ:QRVO). "While TDK has been working on bolstering its product line of BAW and TC-SAW filters, their biggest market share is in the lower margin SAW filter market where they have ~30%-35% market share. Qorvo and Avago by comparison control around 90% of the BAW market with various other firms including TDK making up the difference. Given that companies such as Apple are working with RF companies on the architecture on models that are three years out, we do not see them being able to gain any meaningful share in the near-term..."
- Citi's Atif Malik views the JV as a "sentiment negative" for Skyworks and Qorvo. "While QCOM has had limited success with in-house RF360 [front-end module] initiative, JV with TDK would increase competition in the market. Filters are the highest growth area in RF components given increasing number of bands and growing carrier complexity. Recall, Skyworks acquired Panasonic's TC-SAW assets last year and we believe is working closely with Taiyo Yuden on high end BAW filters."
- Discussing Qualcomm, Bernstein's Stacy Rasgon argues the JV is a long-term positive, while cautioning growing the business will take time. "[A]s a mechanism to gain necessary expertise and table-stakes capability in RF (with less risk than an acquisition, and without needing to stress the balance sheet or issue tons of low-valuation stock to do one) the actions today seem a reasonable step to take."
- On a day the Nasdaq dropped 3.4%, Avago fell 5.1%, Skyworks fell 6.7%, and Qorvo fell 9.8%. Diminished hopes of a Qualcomm buyout offer may have contributed to the selloff in Qorvo, whose market cap ($5.7B) is easily the smallest of the three names.
- Qualcomm's calendar Q4 report arrives on Jan. 27. Skyworks reports on Jan. 28, and Qorvo (warned last week) on Feb. 4.
Wed, Jan. 13, 10:09 AM
- Qualcomm (QCOM +1.9%) is forming a 51/49 JV with Japanese electronic component maker TDK (OTCPK:TTDKY) to be known as RF360 Holdings. The JV is declared to pair TDK's RF filter/module expertise with Qualcomm's RF front-end solutions, and will create filters and front-end modules for mobile devices, IoT hardware, drones, robots, and other end-markets.
- Deal terms: The deal is expected to close by early 2017, and is estimated to have an "aggregate transaction value" of $3B. Qualcomm says its up-front capital investment will total $1.2B, and forecasts the JV will be accretive to EPS in the 12 months following closing. It has the option to buy TDK's interest in the JV 30 months after closing. Qualcomm will also buy "certain assets" from TDK, and partner with the company in areas such as sensors and wireless charging.
- Qualcomm: "RF360 Holdings will have a comprehensive set of filters and filter technologies, including surface acoustic wave (SAW), temperature-compensated surface acoustic wave (TC-SAW) and bulk acoustic wave (BAW) to support the wide range of frequency bands being deployed in networks across the globe. Moreover, RF360 Holdings will enable the delivery of [RF front-end] modules that will include front-end components designed and developed by [Qualcomm]. These components include CMOS, SOI and GaAS Power Amplifiers, a broad portfolio of Switches enhanced via a recent acquisition, Antenna Tuning and the industry's leading Envelope Tracking solution."
- In presentation slides (.pdf), Qualcomm notes the RF front-end market is expected to see a 13% CAGR from 2015-2020 (per Mobile Experts), eventually reaching a size of $18B (aided by growing mobile RF complexity and filter needs). The company adds the businesses being transferred to the JV by Qualcomm and TDK have a revenue run rate approaching $1B/year.
- Qualcomm is higher following the news, while RF chip/module maker Qorvo (QRVO -7.8%) is off sharply. Qorvo rivals Skyworks (SWKS -2%) and Avago (AVGO -1%) are seeing moderate losses. The group also sold off when Qualcomm first unveiled its RF360 front-end module in 2013.
Thu, Jan. 7, 5:38 PM
Thu, Jan. 7, 4:22 PM
- Qorvo and Cirrus Logic have both issued calendar Q4 warnings after the bell, and indicated calendar Q1 sales will also be soft. The warnings come in the wake of reports indicating Apple has cut iPhone production and component orders.
- Fellow iPhone suppliers are selling off in response. Skyworks (NASDAQ:SWKS) -4% after hours. Avago (NASDAQ:AVGO) -4.3%. NXP (NASDAQ:NXPI) -1.6%. InvenSense (NYSE:INVN) -2.5%. Broadcom (BRCM - set to be acquired by Avago) -1.3%. Synaptics (NASDAQ:SYNA) -1.7%. Jabil (NYSE:JBL) -0.7%.
- Many of the aforementioned names had already seen steep losses in regular trading, as the Nasdaq fell 3% amid a broad market selloff.
Tue, Jan. 5, 12:32 PM
- Citing several parts suppliers, Japan's Nikkei reports Apple (AAPL -2.1%) is "expected to reduce output of the iPhone 6s and 6s Plus by around 30% in the January-March quarter compared with its original plans."
- The paper adds Apple initially told component suppliers to keep production even with that seen for the iPhone 6/6+ a year ago, but has seen 6S/6S+ inventories pile up "at retailers in markets ranging from China and Japan to Europe and the U.S."
- In December, Apple sold off after long-time bull Morgan Stanley forecast (in response to checks) iPhone unit sales will drop 6% in FY16 (ends in September), and added to its losses after Dialog Semi (gets over half its sales from Apple) issued a Q4 warning. In November, Credit Suisse reported of component order cuts.
- Apple is trading near $103 following the Nikkei's report. Suppliers Cirrus Logic (CRUS -4.6%), Skyworks (SWKS -5.2%), Qorvo (QRVO -4.8%), Avago (AVGO -1.9%), and InvenSense (INVN -2.7%) are also under pressure.
- Update: Morgan Stanley reacts to the Nikkei's report by noting a 30% production cut is more than the ~20% it was modeling. (source: Notable Calls)
Dec. 21, 2015, 9:37 AM
- Forecasting strong EPS growth following the closing of the Broadcom deal, RBC's Amit Daryanani has added Avago (AVGO +1.6) to his firm's Top Pick list, and hiked his target by $15 to $170.
- Daryanani: "Our bullish bias is predicated on our belief that AVGO will expand EPS from $9.24 in CY15E to [more than] $16.00 by CY18E driven by multiple levers – BRCM integration, asset divestures, RF ramp-up, cost containment and potential deleveraging ... we estimate [less than 30%] of future EPS growth is predicated on organic revenue dynamics and 70%+ is driven by AVGO’s ability to curtail costs, optimize the portfolio, and further deleveraging."
- He forecasts $6B/year in free cash flow by 2018, which in turn is expected to provide Avago with ample liquidity to deleverage or make more acquisitions. "While we are cognizant that the markets (and semiconductors specifically) are observing softer demand trends, in our view AVGO has the potential to offset soft demand trends via self-help levers at its disposal."
- Shares are three weeks removed from jumping in response to an FQ4 EPS beat (driven by margin strength) and better-than-feared FQ1 guidance.
Dec. 15, 2015, 8:17 AM
- Dialog Semiconductor (OTC:DLGNF) is lower by 6.8% in European action after cutting its Q4 revenue outlook to $390M-$400M vs. the previous $430M-$460M.
- Even with the market getting incrementally cautious on Apple (NASDAQ:AAPL) volumes, says Barclays (h/t Notable Calls), this warning is worse and earlier than any have so far forecast. Skyworks (NASDAQ:SWKS) and Avago (NASDAQ:AVGO) could be next.
- Deutsche weighs in as well, saying the warning confirms fears about iPhone 6S sell-through. Even lowered Street estimates for Q1 could prove optimistic.
- AAPL -1.1%, SWKS -1.9%, AVGO -1.1% premarket
Dec. 8, 2015, 10:08 AM
Dec. 3, 2015, 9:15 AM
Dec. 2, 2015, 5:40 PM
Dec. 2, 2015, 5:02 PM
- Avago (NASDAQ:AVGO) has jumped to $142.24 after hours after beating FQ4 EPS estimates, posting in-line revenue, and issuing FQ1 sales guidance that was below consensus but better than feared in light of soft guidance from other chipmakers and reports of Apple component order cuts. Merger partner Broadcom (NASDAQ:BRCM) has risen to $57.47.
- Financials: Lifting FQ4 EPS: Gross margin (non-GAAP) was 62%, up from 61% in FQ3 and 58% a year ago, and above a guidance midpoint of 60.5%. FQ1 GM guidance is at 61% (+/- 1%). Operating expenses rose 12% Y/Y to $338M, slightly topping guidance of $336M. Avago ended FQ4 with $1.82B in cash, and $3.9B in debt.
- Top-line performance: Wireless communications chip sales (37% of revenue, driven in FQ4 by iPhone orders) rose 10% Q/Q and 8% Y/Y. Enterprise storage (LSI/Emulex, 35% of revenue) rose 9% Q/Q and 38% Y/Y; the Emulex purchase boosted Y/Y growth. Wired infrastructure (optical components, 20% of revenue) rose 2% Q/Q and 7% Y/Y. Industrial/other (8% of revenue, hurt by inventory correction) fell 10% Q/Q and 7% Y/Y.
- Avago's results/guidance, PR
Dec. 2, 2015, 4:05 PM
Dec. 1, 2015, 5:35 PM
Broadcom Ltd is engaged in designing, developing and supplying analog & digital semiconductor connectivity solutions. Its product portfolio serves four end markets wired infrastructure, wireless communications, enterprise storage and industrial & other.
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