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
Thu, Oct. 1, 10:58 AM
- Ahead of the Broadcom merger, Avago (AVGO -4%) is selling its optical module unit to contract manufacturing giant Foxconn for a yet-undisclosed sum. Over 900 Avago employees will join Foxconn.
- Avago will hold onto its optical component business, and serve as Foxconn's exclusive optical component supplier. The deal comes two years after Avago bought optical component maker CyOptics for $400M.
- Though its acquisitions (CyOptics, LSI, PLX, Emulex, and soon Broadcom) have received more attention, Avago hasn't been shy about selling assets along the way. Last year, the company sold its flash storage module/controller chip business to Seagate for $450M, and its Axxia network processor unit to Intel for $650M.
- Shares are selling off on a morning the Nasdaq is down 0.6%, and the Philadelphia Semi Index down 2.4%.
Mon, Sep. 28, 7:03 PM
- iFixit's teardown of the 4.7" iPhone 6S turned up two Skyworks (NASDAQ:SWKS) power amplifier modules, much like last year's teardown of the iPhone 6+. However, its teardown of the 5.5" iPhone 6S+ also uncovered a cellular/GPS receive low noise amplifier (LNA) and filter module.
- B. Riley's Craig Ellis thinks the teardowns point to dollar content improvements relative to the 6/6+. "[T]he 'power amplifier module’s (green) baseband-like size (orange) and larger footprint versus similar functional parts from AVGO (blue) /QRVO (yellow) suggest it packs multiple PA’s, filters and switches – we believe it alone is multiple dollars in content ... We believe the [receive module] win is for just the Plus so it’s a modest negative; it’s one of two devices but it’s an integrated component we believe worth over a dollar in content. Lastly, we believe SWKS retains [Wi-Fi power amplifier] parts in both devices channel count goes from one to two, doubling content."
- Meanwhile, Chipworks' 6S teardown turned up two Avago (NASDAQ:AVGO) power amplifier modules, even with the iPhone 6. Craig-Hallum thinks the company is getting $6.75 per 6S unit, up from $6.50 with the iPhone 6. Avago merger partner Broadcom (NASDAQ:BRCM) is still believed to be supplying a Wi-Fi/Bluetooth combo chip (housed inside a Wi-Fi module).
- Chipworks also found four Texas Instruments (NASDAQ:TXN) chips - a charger IC, a power management IC, a display driver, and an unidentified part labeled 6BB27. Last year's iFixit teardowns uncovered a TI touch transmitter IC.
Fri, Sep. 11, 5:16 PM
- "We remain bullish on AVGO and expect the stock to sustain its outperformance driven by multiple self-help levers, which could result in $15 in EPS by CY18 (25% growth, 70% self-help levers)," writes RBC's Amit Daryanani after talking with management. He reiterates an Outperform and $150 target.
- Daryanani: "Key takeaways: 1) Wireless growth is constrained by 100% capacity utilization as current/future customers want more allocation of FBAR [filters]; 2) While content is stable with large OEMs, it’s expected we see double digit (we think 20-30%+ conservatively) growth in next gen product (Fall-2016), 3) BRCM [acquisition] on schedule to close early 2016, keep an eye on MOFCOM deadlines in late-September; and 4) Positive [hard drive] comments on conference call were reflective of PCs & enterprise.”
- Strong iPhone 6-related demand and broader RF content share gains (fueled by FBAR-related sales for 4G phones) helped Avago's wireless revenue rise 69% Y/Y in the July quarter. With the iPhone 6 launch approaching its 1-year anniversary, Y/Y comps are set to get tougher.
- Avago rose 1.8% in regular trading; Broadcom rose 1.2%. Though down 13% from a spring high of $150.50 (hit amid Broadcom deal euphoria), Avago remains up 31% YTD, and has handily outperformed the Philadelphia Semi Index. Broadcom is up 23% YTD.
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
Thu, Sep. 3, 10:09 AM
Fri, Aug. 28, 11:10 AM
- There's plenty of precedent for the recent market action, says Morgan Stanley's Adam Parker, noting the market has dropped more than 5% 16 times since March 2009, and each time has moved on to new highs.
- His half-glass view is that the economy is in the middle of its longest expansion ever, and a less-active Fed, a nervous consumer maybe saving more, a lower oil price, and a flattish dollar all argue for continued expansion.
- Morgan's top ideas to buy on the pullback: AGN, AMZN, AAPL, AVGO, BAC, BKU, DAL, GILD, GOOG, GOOGL, HLT, JPM, KR, LEN, LMCK, MGA, MBLY, NWL, QCOM, SABR, CRM, SBAC, SBUX, BX, TMO, VRSK, WWAV, XL.
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
Wed, Aug. 26, 4:03 PM
Tue, Aug. 25, 5:35 PM
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%.
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