Xilinx (NASDAQ:XLNX) expects FQ3 revenue to be flat to up 4% Q/Q. While the midpoint of the implied range ($604.3M-$628.5M) is below a $623.1M consensus, expectations were low following Microchip's warning (Cypress can relate).
Telecom & data center revenue (hurt by weak wireline telecom capex) -19% Q/Q and -4% Y/Y in FQ2. But industrial, aerospace, & defense +28% Q/Q and +8% Y/Y. Broadcast, consumer, & auto -5% Q/Q and -6% Y/Y. Everything else -4% Q/Q and +12% Y/Y.
Gross margin was 71.9%, +280 bps Q/Q and above guidance of 70%. Xilinx expects GM to fall to ~69% in FQ3.
$200M was spent on buybacks, providing a lift to EPS. R&D spend +11% Y/Y to $138.4M; SG&A -3% to $93.9M.
Archrival Altera (NASDAQ:ALTR) is following Xilinx higher. Its Q3 report arrives on Oct. 23.
Microchip's (MCHP -12.5%) calendar Q3 warning, which was accompanied by a declaration that it believes "another industry correction has begun and that this correction will be seen more broadly across the industry in the near future," is taking a heavy toll on chip stocks (SOXX -5.5%).
Chip equipment makers are also getting hit: AMAT -3.5%. KLAC -3.3%. LRCX -2.3%. UTEK -2.5%. KLIC -2%.
As Microchip noted in yesterday's warning, the company's very diversified customer base, together with its recognition of distributor revenue on a customer sell-through basis rather than a distributor sell-in basis, often allow it to see industry changes before peers.
The microcontroller vendor added its warning was driven by a September decline in sales to Chinese clients, and observed it has typically "returned to sequential revenue growth after two quarters" during past downturns.
Chip stocks have had a good run over the last 12 months, aided by healthy mobile demand and the industry's consolidation wave.
Among the year's best tech performers, chip stocks are selling off (SOXX -1.8%) on an up day for the Nasdaq following weak numbers from FPGA giant Xilinx (XLNX -14.5%).
Xilinx missed FQ1 revenue estimates by over $18M, and also guided for FQ2 revenue to be well below consensus. The company blamed the FQ1 shortfall on soft defense and wireless sales. BMO and BofA/Merrill have downgraded Xilinx; the former thinks Xilinx's 28nm share might be peaking.
Xilinx stated on its CC (transcript) the wireless weakness was mostly due to soft 28nm chip sales to Chinese 4G base station vendors; Chinese 4G rollouts have long been viewed as a catalyst for both Xilinx and Altera (ALTR -4.7%). Aerospace/defense sales were hurt by program timing issues.
Meanwhile, switch/router vendor Juniper offered light Q3 guidance to go with a Q2 beat. The company noted on its CC (transcript) "market dynamics" for U.S. carriers, including M&A activity, are affecting project rollouts.
Also: Analog/mixed-signal IC vendor Linear (LLTC -4.1%) is selling off in spite of beating FQ4 estimates and guiding in-line (8%-11% Y/Y FQ1 rev. growth vs. 9.1% consensus).
In addition to missing FQ1 revenue estimates by $18.8M, Xilinx (NASDAQ:XLNX) is guiding for FQ2 revenue to be flat to down 4% Q/Q. The consensus is for revenue $644.5M, 5% above FQ1 levels.
Xilinx attributes the FQ1 weakness to soft sales to defense and wireless clients.
Industrial, aerospace, & defense sales (31% of revenue) -9% Q/Q and -11% Y/Y, telecom & data center (50% of revenue) +1% Q/Q and +20% Y/Y, broadcast, consumer, & automotive (16% of revenue) +5% Q/Q and +3% Y/Y, everything else (3% of revenue) +39% Q/Q and +11% Y/Y.
Gross margin +150 bps Q/Q to 69.1%, and above guidance of 68.1%. Xilinx expects an FQ2 GM of 70%. $100M was spent on buybacks.
Altera (ALTR) expects FQ2 revenue to grow 2%-6% from an FQ1 level of $461.1M. That implies a range of $470M-$488.8M, above a $461.3M consensus.
The FPGA maker suggests stronger-than-expected sales related to Chinese 4G deployments contributed to its FQ1 beat. Telecom & wireless revenue (45% of sales) grew 14% Q/Q and 23% Y/Y, and Asia-Pac revenue 6% Q/Q and 24% Y/Y.
Those numbers offset weakness in networking, computer, & storage (-20% Q/Q and -7% Y/Y), as well as the Americas (-17% Q/Q and -13% Y/Y). Other areas of strength included industrial, military, and automotive (+13% Y/Y, 22% of revenue), EMEA (+11%), and Japan (+18%).
Shares +4% AH. Rival Xilinx (XLNX), which often moves in tandem with Altera, is up just 0.5% after falling 9.1% in regular trading due to its light FQ1 guidance. Altera fell only 0.6% in regular trading after initially showing steeper losses.
Altera is expected to see 13.7% Y/Y June quarter revenue growth at its guidance midpoint, and Xilinx 10.5% growth.
Texas Instruments (TXN) expects Q2 revenue of $3.14B-$3.4B and EPS of $0.55-$0.63, largely above a consensus of $3.15B and $0.52. Shares +3.4% AH. (Q1 results, PR)
Xilinx (XLNX) expects FQ1 revenue to be flat to up 4% from an FQ4 level of $617.8M. That implies a midpoint of $630.2M, below a $638.4M consensus. Shares -5.1% AH. Rival Altera (ALTR) -4% ahead of tomorrow's FQ1 report. (FQ4 results, PR)
ServiceNow (NOW) expects Q2 revenue of $160M-$162M and full-year revenue of $652M-$657M, above consensus forecasts of $156.7M and $644.2M. Shares -1.6% AH. (Q1 results, PR)