Tue, Nov. 10, 8:32 AM| Tue, Nov. 10, 8:32 AM | 16 Comments
Thu, Nov. 5, 4:32 PM
- Avago (NASDAQ:AVGO) has risen to $124.00 after hours after Skyworks provided strong FQ1 guidance to go with FQ4 results that nearly matched its October outlook, and beaten-down Qorvo beat FQ2 estimates and offered mixed FQ3 guidance (below-consensus revenue, in-line EPS).
- Avago's FQ4 (October quarter) report typically arrives later this month.
Thu, Oct. 29, 12:29 PM
- Down on Monday following Dialog Semi's Q3 report and up yesterday in the wake of Apple's results/guidance, chip stocks are selling off again (SOXX -2.5%) after leading microcontroller vendor NXP (NXPI -18.2%) posted mixed Q3 results and (more importantly) guided for Q4 revenue to be down by a "low to upper-teens" % Q/Q. The Nasdaq is down 0.3%.
- Also: 1) NXP rival and fellow European chipmaker STMicroelectronics (STM -5.8%) slightly missed Q3 revenue estimates and has guided for Q4 revenue to be down 6% (+/- 3.5%) Q/Q. 2) Network processor vendor Cavium (CAVM -5%) issued light Q4 guidance, while blaming a distribution model change at its biggest data center customer. 3) Microcontroller maker Atmel (ATML -2.4%, set to be acquired by Dialog) missed Q3 revenue estimates and guided for Q4 revenue of $266M-$286M, below a $296.1M consensus.
- On the bright side, Apple-dependent Cirrus Logic (CRUS -5.7%) beat FQ2 EPS estimates (revenue was in-line) and provided solid FQ3 guidance, and fellow Apple/Samsung supplier InvenSense (INVN +14.3%) beat FQ2 estimates and issued in-line FQ3 guidance. Cirrus is nonetheless selling off; the earnings call (transcript) was generally upbeat, with management talking up FY16/FY17 growth opportunities related to smart codec and boosted amplifier sales.
- NXP merger partner Freescale (FSL -15.4%) is naturally seeing big losses. Other decliners include RF chipmakers Skyworks (SWKS -3.1%), Avago (AVGO -6%), and Qorvo (QRVO -2.6%), analog/mixed-signal chipmakers Texas Instruments (TXN -3%), ON Semi (ON -5.9%), MagnaChip (MX -6.8%), Fairchild (FCS -4.3%), Maxim (MXIM -3.1%), and IDT (IDTI -5.2%), and smart TV SoC vendor/STMicro rival Sigma Designs (SIGM -3.2%).
- Like NXP, Cirrus, and InvenSense, Skyworks, Avago, Qorvo, TI, and Fairchild are Apple suppliers. Fairchild and Maxim have recently benefited from M&A reports (I, II).
- Both NXP and STMicro reported seeing conditions deteriorate as Q3 progressed. NXP added lower-than-expected chip sell-through led to higher channel inventories, and STMicro stated "lower consumer spending in China is impacting the dynamics of the distribution channel in the region and the industry more globally, particularly in automotive." NXP has added 20M shares to its buyback in an attempt to soften the blow.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Tue, Oct. 27, 7:48 PM
- Apple beat estimates with the help of ASP/margin strength and 99% Greater China growth, reported 48M iPhone sales (consensus was around 48.5M), and guided for FQ1 revenue of $75.5B-$77.5B vs. a $77.1B consensus. The numbers are good enough for chip suppliers hammered yesterday thanks to Dialog Semi's Q3 report to move higher.
- Cirrus Logic (NASDAQ:CRUS) is up 2% after hours ahead of tomorrow afternoon's FQ2 report. Skyworks (NASDAQ:SWKS) is up 1.7%, Avago (NASDAQ:AVGO) is up 2%, InvenSense (INVN - reports tomorrow) is up 2.2%, NXP (NXPI - reports tomorrow) is up 1.3%, and Qorvo (NASDAQ:QRVO) is up 1%.
Mon, Oct. 26, 10:52 AM
- Apple suppliers Qualcomm (QCOM -2.9%), Cirrus Logic (CRUS -10.1%), Skyworks (SWKS -5.1%), Qorvo (QRVO -5%), Avago (AVGO -4.2%), Broadcom (BRCM -2.3%), NXP (NXPI -3.5%), InvenSense (INVN -2.1%), Synaptics (SYNA -4.4%), and Analog Devices (ADI -2.7%) are selling off after iPhone/iPad power management IC supplier Dialog Semi (down 18.8% in Frankfurt) reported 18% Y/Y Q3 revenue growth and guided for annual Q4 growth to be in a range of -1% to +6%. Both the Q3 sales and Q4 guidance missed consensus estimates.
- NXP merger partner Freescale (FSL -2.9%) is also lower. As is Atmel (ATML -8.1%), which is set to merge with Dialog in a cash/stock deal. Atmel was originally due to receive over half its payout in Dialog shares, whose value has fallen considerably since the deal was announced in mid-September.
- Broadcom, set to merge with Avago, reports after the bell. Apple reports tomorrow, and Cirrus, NXP, and InvenSense on Wednesday. With the help of improving demand and ongoing M&A, chip stocks had bounced strongly from their August/September lows in recent weeks.
Tue, Oct. 6, 12:57 PM
- Skyworks (NASDAQ:SWKS) has tumbled towards $75 after announcing it's buying storage and telecom IC vendor PMC-Sierra (NASDAQ:PMCS) for $2B in cash on hand. (PR)
- Fellow RF chipmaker Avago (AVGO -6.7%), which (thanks to the LSI acquisition) competes against PMC-Sierra in the storage controller market, is also off, as is merger partner Broadcom (BRCM -3.2%), which competes against PMC to an extent in the telecom IC and network processor markets. RF peer Qorvo (QRVO -3.3%) is also getting hit. The Nasdaq is down 1.2%.
- Possibly hurting the group: Skyworks has used the PMC deal to announce it expects FQ4 (calendar Q3) revenue of $880M and EPS of $1.52. That's slightly above prior guidance of $875M and $1.51 and a consensus of $876M and $1.51, but expectations have been high following a long string of beat-and-raise quarters.
- The PMC acquisition expands Skyworks' reach to a slew of non-RF chip markets and enterprise/telecom infrastructure end-markets. It's expected to yield $75M in cost synergies within 12 months of closing (expected in 1H16), and subsequently boost Skyworks' annual EPS by $0.75. Assuming that target is hit, Skyworks is paying 14x forward EPS.
- Update (1:04PM ET): BofA/Merrill is defending Skyworks and Avago, arguing forward P/Es of less than 10 make shares very cheap.
- Update 2 (5:01PM ET): The group staged a comeback in afternoon trading. Skyworks closed down 1.4%, Avago 3.4%, Qorvo 1.1%, and Broadcom 1.6%. The Nasdaq closed down 0.7%.
Thu, Oct. 1, 2:01 PM
- After outperforming yesterday as markets rallied, chip stocks are doing the opposite today amid a selloff. The Philadelphia Semi Index (SOXX -2.1%) is back below $80.
- Possibly hurting the group: Digitimes reports iPhone chip suppliers are worried Apple could cut its Q4 orders, and that one "major analog IC supplier" has disclosed a slight December order cut. At the same time, Digitimes states suppliers won't know if major order cuts will happen for at leas 1-2 months. iPhone suppliers seeing major losses include NXP (NXPI -4.2%), Avago (AVGO -3.8%), Qorvo (QRVO -4.5%), Cirrus Logic (CRUS -3.1%), Fairchild (FCS -4.9%), and Analog Devices (ADI -3.8%).
- However, it's worth noting several chipmakers lacking iPhone exposure are also down strongly. The list includes Himax (HIMX -3.5%), PMC-Sierra (PMCS -4.1%), InPhi (IPHI -4.6%), Semtech (SMTC -4.6%), and QuickLogic (QUIK -5.7%). Chip IP provider CEVA (CEVA -3.8%) and specialty foundry TowerJazz (TSEM -5%) are also selling off.
- Memory giant Micron reports after the bell.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Tue, Sep. 8, 3:25 PM
- The Philadelphia Semi Index (SOXX +3.9%) has risen to its highest levels since mid-August on a day the Nasdaq is posting a 2.3% gain.
- Likely helping out: Microchip (MCHP +8.4%), still often seen as an industry bellwether (though its commentary accompanying last fall's warning sparked criticism), has adjusted its FQ2 (calendar Q3) revenue and EPS guidance to $545M-$563M ($554M midpoint) and $0.60-$0.66 from a prior $$532M-$569M ($550.5M midpoint) and $0.58-$0.66. The outlook comes after many chipmakers (Microchip included) offered below-consensus calendar Q3 guidance amid an inventory correction, weak PC demand, and slowing Chinese smartphone growth.
- Microchip's core ops are said to be tracking in-line with prior expectations, and recently-acquired Micrel's above expectations. The 8.6M shares issued in the Micrel deal have been repurchased.
- Also: Various Taiwanese chipmakers and supply chain firms have reported August sales. Chip packaging/testing firms ASE (ASX +5.9%) and Siliconware (SPIL +4.1%) respectively reported sales were up 5.8% and 5.7% M/M, and up 9.5% and down 4.2% Y/Y.
- Big gainers include Microchip peers NXP (NXPI +6.8%), Freescale (FSL +5.8%), Silicon Labs (SLAB +4.4%), and Cypress (CY +4.4%). Others include Avago (AVGO +5.8%), Xilinx (XLNX +5.7%), Cavium (CAVM +5.5%), Analog Devices (ADI +6.3%), Synaptics (SYNA +5.4%), Linear (LLTC +4.6%), Cirrus Logic (CRUS +4.7%), IDT (IDTI +4.6%), Sigma Designs (SIGM +4.9%), and chip equipment maker Axcelis (ACLS +8%).
- SanDisk, ON Semi, and Silicon Motion are benefiting from upgrades/bullish coverage. Apple holds its iPhone event at 1PM ET tomorrow.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Wed, Aug. 26, 4:44 PM
- Avago (NASDAQ:AVGO) has guided for FQ4 revenue of $1.85B (+/- $25M), slightly below a $1.86B consensus at the midpoint. However, expectations were relatively low, given the soft guidance many chipmakers have provided in July/August.
- Segment performance: FQ3 wireless communications revenue (RF components, boosted by iPhone growth and 4G-driven share gains) rose 7% Q/Q and 69% Y/Y, and made up 35% of revenue. Enterprise storage (boosted by the Emulex acquisition) rose 26% Q/Q and 46% Y/Y, and was 34% of revenue. Wired infrastructure fell 3% Q/Q and rose 7% Y/Y, and was 21% of revenue. Industrial/other fell 21% Q/Q and rose 2% Y/Y, and was 10% of revenue.
- Financials: Gross margin was 61%, flat Q/Q and up 400 bps, and above a guidance midpoint of 60%. FQ4 GM guidance is at 60.5% (+/- 1%). M&A-related cost cuts resulted in operating expenses rising only 7% Y/Y to $330M. Avago ended FQ3 with $1.4B in cash, and $3.9B in debt.
- Avago is up 2% after hours to $118.35. Shares rose 7.1% in regular trading ahead of earnings amid a giant market rally. Merger partner Broadcom (NASDAQ:BRCM) rose 5.6%.
- FQ3 results, PR
Tue, Aug. 4, 2:33 PM
- Apple is down 2.6% on strong volume (adding to recent post-earnings declines), and a slew of iPhone/iPad chip suppliers are also seeing major losses today. The Nasdaq is down just 0.3%, while the Philadelphia Semi Index is down 1.5%.
- RF chipmakers Skyworks (SWKS -5.4%), Qorvo (QRVO -3.8%), and Avago (AVGO -3%) are among the decliners, as are audio codec supplier Cirrus Logic (CRUS -5.5%), motion sensor supplier InvenSense (INVN -5.7%), NFC/motion co-processor supplier NXP (NXPI -3.3%), and LCD driver supplier Synaptics (SYNA -3.8%). The selloff has occurred in the absence of major news
- NXP merger partner Freescale (FSL -2.8%) is also off, as is chip packaging/testing firm Amkor (AMKR -4.2%), which has strong iPhone exposure. Earlier today, the EC announced NXP has offered concessions to win regulatory approval for the Freescale deal, which has a review deadline of Sep. 4. NXP has already agreed to sell its base station power amplifier unit for $1.8B to appease regulators.
- InvenSense reports after the close. The other aforementioned names have already posted their calendar Q2 results.
Thu, Jul. 30, 6:33 PM
- On top of missing Q2 estimates, Broadcom (NASDAQ:BRCM) has guided for Q3 revenue of $2.135B (+/- $75M), below a $2.24B consensus. But with many other chipmakers having already issued soft Q3 outlooks, and Broadcom's shares now effectively linked to Avago's, the numbers are being taken in stride.
- Q2 gross margin was 56.6%, +220 bps Q/Q and +170 bps Y/Y, and above a guidance midpoint of 56%. Q3 is expected to drop to 55.3% (+/- 75 bps) in Q3. R&D spend fell 15% Y/Y to $538M thanks to Broadcom's baseband modem exit, while SG&A spend rose 3% to $188M. $128M was spent on buybacks.
- Separately, the WSJ reports the IRS has declined to promise the stock portion of Avago's (NASDAQ:AVGO) pending $37B deal to merge with Broadcom will be a tax-free transaction for Broadcom shareholders. However, if Avago ($35B market cap) remains larger than Broadcom ($31B market cap), the stock portion will be tax-free. Either way, Broadcom shareholders will owe taxes on the deal's $17B cash payout.
- Should the stock portion of the deal be taxable, Avago plans to offer Broadcom investors tax-deferring units instead of stock. That would let investors decide when to make tax payments.
- BRCM +0.6% AH. AVGO -0.9%.
- Broadcom's Q2 results, PR
Wed, Jul. 29, 4:33 PM
- Skyworks (NASDAQ:SWKS) and Avago (NASDAQ:AVGO) have sold off in AH trading after rival Qorvo (down 15.2%) provided soft FQ2 (calendar Q3) guidance to go with an FQ1 beat.
- Qorvo didn't give an explanation (Apple/Samsung share loss? Soft Chinese demand?) in its earnings release for the outlook. The numbers come 6 days after Skyworks provided above-consensus FQ4 guidance to go with an FQ3 beat. Avago is expected to report in August.
- Update: On its earnings call, Qorvo stated demand from Chinese phone OEMs has softened, and that some are carrying excess inventory. The company also joined other chipmakers in mentioning Chinese 4G base station demand is weak. Skyworks closed down 2.7% AH, and Avago down 3.3%.
Thu, Jul. 23, 1:40 PM
- Micron (MU +3.7%), Skyworks (SWKS +3.2%), Qorvo (QRVO +1.2%), and Avago (AVGO +1.9%) are recovering some of the Wednesday losses seen in response to Apple's FQ3 iPhone sales print and FQ4 guidance. The Nasdaq is down 0.4%.
- The gains come after Apple-dependent Cirrus Logic (CRUS +19.8%) beat FQ1 estimates and provided strong FQ2 guidance, and beaten-down NAND flash giant SanDisk (SNDK +17.5%) delivered a Q2 beat and offered (better than feared) in-line guidance. Micron received 35% of its May quarter revenue from NAND.
- The numbers are overshadowing Qualcomm's soft FQ4 guidance, blamed to a large extent on iPhone share gains and the lack of a Galaxy S6 app processor design win.
- Stifel's Tore Svanberg has upgraded Cirrus to Buy, while asserting the audio codec developer is "entering a significant product cycle over the next 12-24 months." He's upbeat about the launch of 55nm codecs (expected to provide cost savings), and sees evidence of further traction with top Android OEMs.
- Oppenheimer (Perform rating) estimates Cirrus will (thanks to a smart codec design win) get over $3+ per iPhone 6S unit compared with ~$2.15 per iPhone 6, and notes another smart codec win with a top-tier OEM will ramp over the next 2 quarters. Apple was 62% of FQ1 revenue vs. 65% in FQ4; Samsung (lifted by a Galaxy S6 win) was 18%.
- BofA/Merrill has upgraded SanDisk to Buy. Pac Crest's Monica Garg (Outperform) notes Q2 retail and enterprise sales were both better than expected, as was an ASP decline of 6%. She's also pleased a client SSD delayed by qualification issues will begin shipping in Q4, and asserts SanDisk has both the best planar NAND technology and the industry's first 48-layer 3D NAND chips. Bernstein is also upbeat.
- Skyworks reports after the bell. Various analysts have defended Skyworks, Avago, and Qorvo following Apple's numbers, asserting 4G growth/greater RF complexity remains a tailwind. Oppenheimer estimates Skyworks will see a "15%-20% content boost" with the iPhone 6S, and Avago a more modest gain.
- Prior Cirrus coverage. Prior SanDisk coverage.
Tue, Jul. 21, 5:10 PM
- Apple beat FQ3 estimates, but reported slightly below-consensus iPhone unit sales of 47.5M. In addition, FQ4 revenue guidance of $49B-$51B was below a $51.1B consensus. iPhone revenue was up 59% Y/Y, while iPad revenue fell 23%.
- iPhone/iPad chip suppliers are selling off in response. Cirrus Logic (NASDAQ:CRUS) -5.6% AH. Skyworks (NASDAQ:SWKS) -6.8%. Qorvo (NASDAQ:QRVO) -6.4%. Avago (NASDAQ:AVGO) -3.8%. Broadcom (BRCM - merging with Avago) -1.3%. InvenSense (NYSE:INVN) -4%. NXP (NASDAQ:NXPI) -3.4%.
Thu, Jul. 9, 1:02 PM
- Avago (AVGO -1.3%) has joined Mellanox and Brocade in selling off in response to a major calendar Q2 warning from Fibre Channel and Ethernet adapter card/controller/switch maker QLogic (down 20.9%).
- QLogic, which also posted a calendar Q1 sales miss and provided light guidance in late April, blames its warning on "lower than expected demand due to general weakness in the Company's traditional enterprise server and storage markets, and a build-up of inventory at certain of its OEM customers due to a slower next-generation server transition in enterprise environments." The latter is an apparent reference to Intel's Grantley Xeon server CPU platform.
- Avago recently acquired QLogic archrival Emulex, and before that bought PCIe switch maker PLX Technology. Merger partner Broadcom also has strong server connectivity exposure, via its Ethernet transceiver and switching chips. Stifel has speculated Avago could work on end-to-end Ethernet solutions combining the company's optical transceivers, Emulex's adapter cards, and Broadcom's switching chips.
Tue, Jul. 7, 1:10 PM
- RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.1%), and Avago (AVGO -3.2%) are posting 3%+ declines on what's proving a rough day for many high-beta tech stocks.
- With Chinese equities plunging, Skyworks, Qorvo, and Avago's Chinese exposure could be contributing to their selloff. The Nasdaq is down 0.7%, and the Philadelphia Semi Index 1.7%.
- Avago's decline comes as Oppenheimer's Rick Schafer downgrades merger partner Broadcom (BRCM -2%) to Market Perform. Curiously, he also declares Avago (along with Skyworks) to be a top wireless chip pick.
- Schafer: "Rising RF complexity (and content) remains one of our favorite thematic plays heading into 2H15 ... We see incremental RF content opportunities for both Avago and Skyworks on the forthcoming iPhone 6S ... Skyworks further benefits from 50 percent plus 4G reference design share with China's major baseband suppliers."
- Broadcom shareholders are set to receive either $54.50/share in cash, 0.4378 Avago shares for each Broadcom share, or some combination thereof, with the cash portion of the deal totaling $17B. Broadcom currently trades 7% below the cash payout price, and (based on Avago's current trading levels) 11% below an equity payout price of $56.87.
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