Thu, May 7, 11:13 AM
- Just as Qorvo (QRVO +9%) and Avago (AVGO +5.1%) rallied in response to Skyworks' (SWKS +2.1%) beat-and-raise FQ2 report last week, Skyworks and Avago are rallying today after Qorvo beat FQ4 estimates with the help of strong iPhone 6-related sales, and offered above-consensus FQ1 guidance.
- Needham's Quinn Bolton has upgraded Qorvo to Buy, and set an $88 target. Bolton: "Management expects continued robust revenue growth in C2H15 as it has high visibility into the major Tier 1 OEM platform launches later this year. Additionally, QRVO expects continued 4G adoption in the emerging markets to drive strong growth in F1Q16 and C2H15, echoing recent peer commentary."
- He also notes Qorvo now expects to exceed prior RF Micro/TriQuint merger synergy targets, and that its 2H15 gross margin and op. margin could respectively top targets of 50% and 30%. "We believe QRVO's valuation multiple has yet to reflect the greater than expected synergies, revenue growth and operating leverage."
- Qorvo is now aiming for more than $150M/year in synergies by the end of 2016. Major FQ4 design wins included a diversity switch module for a flagship Android phone set to launch in 2H15, and power amplifier wins for major base station and an 802.11ac Wi-Fi chipset. The company asserts the merger is helping it develop integrated RF front-end solutions combining amplifiers, filters, and diversity modules.
Fri, May 1, 12:12 PM
- A slew of firms have hiked their Skyworks (SWKS +6%) targets after the company beat FQ2 estimates with the help of strong iPhone 6/Galaxy S6-related demand, and (in contrast to many chip industry peers) provided above-consensus FQ3 guidance. Peers Qorvo (QRVO +4.5%) and Avago (AVGO +4.1%) are following Skyworks higher.
- Pac Crest's John Vinh ($110 target): "SWKS confirmed that its SkyOne Ultra front-end module has been designed into Samsung’s GS6. We believe the company’s content increased by $1 in the GS6 vs. the GS5 ... we believe this helped more than offset weakness in the China smartphone market, which was down in CQ1. SWKS still sees a strong ramp of 4G smartphones in China and estimates units growing from 100 million in 2014 to the range of 225 million to 250 million in 2015."
- Raymond James' Steven Smigle ($117 target) notes the SkyOne Mini 2G/3G/4G front-end module line (aimed at cheaper phones) has a number of Chinese design wins, and expects Chinese phone demand to rebound in 2H15. "Total sales for filters sound more bullish compared to last quarter with management believing they will exceed their goal of selling 1 billion TC-SAW filters in 2015 ... The Broad Markets segment also sounds positive with new design wins in various automotive and WiFi connectivity solutions."
- B. Riley's Craig Ellis ($120 target): "[N]ew integrated products such as diversity receive modules are poised to compliment the now-ramping SkyOne Ultra, Panasonic JV ops integration and optimization remains in early-innings, and the ability to price for value gets steadily better as the portfolio increasingly migrates to Integrated or Broad Market products which are now 69.0% of sales."
- Qorvo reports on May 6. Avago typically reports later in May.
Fri, Apr. 24, 2:03 PM
- Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
- NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
- Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
- As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
- Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
- Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Wed, Feb. 25, 6:19 PM
- In addition to beating FQ1 EPS estimates (while posting in-line revenue), Avago (NASDAQ:AVGO) is guiding for FQ2 revenue to be down 3% to up 1% Q/Q. That implies a range of $1.59B-$1.65B, above a $1.54B consensus.
- Driving the FQ1 EPS beat: Gross margin was 59%, up from FQ4's 58% and the year-ago period's 52%, and above guidance of 57.5% (+/- 1%). FQ2 GM guidance is at 58.5% (+/- 1%).
- Also helping EPS: Operating expenses totaled $293M, up from $142M a year ago thanks to acquisitions, but down from $303M in FQ4 thanks to cost cuts.
- As expected, strong iPhone-related sales acted as a big FQ1 tailwind: Wireless product sales (40% of total revenue) rose 6% Q/Q and 90% Y/Y. Wired infrastructure (21% of total revenue, boosted by the PLX and LSI acquisitions) fell 1% Q/Q and rose 52% Y/Y. Enterprise storage (29% of revenue, a product of the LSI acquisition) rose 5% Q/Q. Industrial/other (10% of revenue) fell 4% Q/Q and rose 21% Y/Y.
- Avago has risen to $119.03 AH, making new highs in the process. RF component rivals are ticking higher: Skyworks (NASDAQ:SWKS) +0.9% to $88.49. Qorvo (NASDAQ:QRVO) +1.1% to $67.92.
- Avago's FQ1 results, Emulex acquisition, PR
Wed, Feb. 25, 4:13 PM| Comment!
Tue, Feb. 24, 5:35 PM
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Fri, Jan. 23, 1:03 PM
- After barely moving in AH trading yesterday in response to its FQ1 beat and strong FQ2 guidance, Skyworks (SWKS +2.3%) has risen above $81 today as a flurry of bullish analyst reactions arrive. Rivals/fellow iPhone suppliers Qorvo (QRVO +4.8%) and Avago (AVGO +1.6%) are heading in the same direction.
- Brean's Mike Burton, hiking his Skyworks target by $22 to $92: "The [FQ1] upside was predominantly driven by the Integrated Solutions segment as Apple's iPhone 6/6+ ramped ... we believe LTE growth in China and several new model ramps (Samsung Galaxy S6 amongst others to be unveiled in Barcelona) coupled with Skyworks Solutions less seasonal Broad Markets business is driving the better-than-seasonal guidance."
- Burton also thinks Skyworks is on its way to achieving a 50% gross margin (up from FQ1's 46.7%), and notes inventory days (58) were down by 15 Y/Y.
- Canaccord's Mike Walkley: "We believe Skyworks' diverse analog portfolio is enabling content share gains with its smartphone customers. Further, we anticipate Skyworks' share gains in markets such as WiFi 802.11ac, wireless infrastructure, and the IoT market are also driving strong growth trends." His FY16 (ends Sep. '16) EPS estimate has been hiked by $0.66 to $5.89.
- On the CC (transcript), CEO David Aldrich noted Skyworks' non-mobile design wins include a GM telematics platform, Cisco home gateways, ZigBee connectivity modules for Philips/LG smart light bulbs, Amazon's Echo and Fire TV devices, and a DirecTV set-top. China's Xiaomi has joined Apple and Samsung as a major mobile client.
- Qorvo reports on Jan. 28.
Dec. 4, 2014, 12:14 PM
- Avago (AVGO +7.7%) has soared above $100 after beating FQ4 estimates, reporting a stronger-than-expected gross margin, and providing above-consensus FQ1 guidance.
- RF component peers Skyworks (SWKS +4.2%), RF Micro (RFMD +3.9%), and TriQuint (TQNT +4%) are also up, as is fellow iPhone supplier Cirrus Logic (CRUS +2.6%). Cirrus recently sold off after Deutsche cut its calendar Q1 iPhone production forecast.
- On its CC (transcript), Avago noted wireless growth (+73% Q/Q and +83% Y/Y) was "largely driven by the ramp of a new smartphone generation and a large North American smartphone OEM" (undoubtedly Apple).
- Avago added it also saw strong demand for FBAR filter-related products (gaining share due to 4G RF requirements) elsewhere, with demand from Chinese 4G phone OEMs particularly strong. Over 80% of wireless revenue is now FBAR-related.
- Avago expects wireless revenue to be "flat to perhaps slightly down" Q/Q in seasonally weak FQ1, with strong demand from Apple (referred to once more as "a large North American smartphone OEM") offsetting seasonal declines elsewhere. The company notes it remains "very capacity-constrained," and has been making investments to deal with the issue.
- At least 10 sell-side firms have hiked their targets.
Dec. 3, 2014, 4:35 PM
- Avago (NASDAQ:AVGO) expects FQ1 revenue from continuing ops to be flat to up 4% Q/Q; that implies a range of $1.59B-$1.65B, above a $1.51B consensus.
- FQ4 gross margin was 58%, up from 57% in FQ3 and 51% a year ago, and above guidance of 56% (+/- 1%). FQ1 GM guidance is at 57.5% (+/- 1%).
- Wireless revenue, boosted by iPhone-related sales, rose 73% Q/Q and 83% Y/Y, and made up 39% of total revenue. Enterprise storage (a product of the LSI acquisition) rose 15% Q/Q, and was 29% of revenue. Wired infrastructure (boosted by the PLX acquisition) rose 1% Q/Q and 43% Y/Y, and was 22% of revenue. Industrial/other fell 2% Q/Q and rose 13% Y/Y, and was 10% of revenue.
- Thanks to cost cuts and the sale of the flash storage and Axxia (network processor) units, opex was 18.9% of revenue, down from 23.8% in FQ3 and 19.6% a year ago. In addition, opex is expected to decline by $2M in FQ1 to $301M.
- FQ4 results, PR
Dec. 3, 2014, 4:09 PM| 4 Comments
Dec. 2, 2014, 5:35 PM
Nov. 26, 2014, 2:52 PM
- Chip stocks are outperforming after Analog Devices (ADI +5.2%) beat FQ4 estimates and offered in-line FQ1 guidance. The Philadelphia Semi Index (SOXX +1.9%) has made new highs.
- Notable gainers include many analog/mixed-signal and telecom IC firms: TXN +3%. LLTC +2.7%. SMTC +3.1%. ISIL +3.3%. SWKS +3.7%. AVGO +2.9%. OVTI +3.2%. FSL +3.1%. EZCH +2.5%. XLNX +2.3%. ALTR +2.1%. MX +4.3%. PMCS +2.7%. BRCM +2%.
- On its CC (transcript), ADI noted its telecom equipment chip sales are holding up well in spite of weak capex, aided by the fact its dollar content for 4G base stations is "at least 20% to 30% better" than for 3G base stations. The company also mentioned its lead times were stable in FQ4.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Nov. 7, 2014, 3:18 PM
- Skyworks (SWKS -3.7%) has received at least seven target hikes since delivering above-consensus FQ1 guidance yesterday afternoon and upping its dividend. But shares are nonetheless seeing profit-taking following a huge 2014 rally. Peers RF Micro (RFMD -4.4%), TriQuint (TQNT -4.1%), and Avago (AVGO -3%), each of which has also fared well this year, are also selling off.
- Needham (target hiked to $70) notes FQ4 results benefited from "broad-based demand drivers including content gains at multiple smartphone OEMs, the LTE ramp in China, the 3G upgrade cycle in emerging markets, multi-stream 802.11ac [Wi-Fi] deployments and [high-power amplifier] penetration across multiple vertical end markets." It also observes management "expects revenue will continue to grow at a rate faster than the industry in F1Q15 and FY15 overall."
- Oppenheimer declares the RF component boom cycle to be in its early innings. Pac Crest thinks Skyworks' Apple sales are offsetting Samsung weakness, and is upbeat about strong non-mobile demand. "Channels remain lean and inventory build suggests good multi-quarter visibility," says BofA/Merrill.
- Shares currently go for 14x the pre-earnings FY15 (ends Sep. '15) EPS consensus exc. net cash; the consensus should go up post-earnings.
Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 14, 2014, 9:33 AM
- Skyworks (NASDAQ:SWKS) expects FQ4 (Sep. quarter) revenue of $718M and EPS of $1.08, above a consensus of $679.5M and $1.01. Full FQ4 results arrive on Nov. 6.
- The RF component maker also hiked its FQ3 guidance in June. Strong iPhone 6-related demand may have contributed to the latest hike, given recent reports.
- Peers are also up strongly amid a higher open for equities: RFMD +5.5%. TQNT +5.3%. AVGO +3%. Like other chip stocks, the group sold off on Friday following Microchip's warning.
Aug. 29, 2014, 11:03 AM
- Avago (AVGO +8.1%) has received a slew of target hikes after beating FQ3 estimates, reporting strong margins, and issuing healthy FQ4 guidance. RF component peers Skyworks (SWKS +1.6%), RF Micro (RFMD +4.5%), and TriQuint (TQNT +5.2%) are also higher.
- "We believe Street continues to under-appreciate this self-help story where mgmt has a proven record of cutting costs, paying down debt, and executing on multiple secular growth cycles," says BofA/Merrill. Its FY14 and FY15 EPS forecasts have respectively been raised by 20% and 25%.
- Credit Suisse: "Avago's leverage to structural growth drivers including content increases in the Industrials/autos end-mkts and accelerating demand for bandwidth, as well as, product cycles (4G/LTE wireless ramps at Apple and China) should allow the company to outperform peers." The diversification provided by the LSI deal is seen providing "further stability."
- Morgan Stanley expresses "high conviction in management's ability to execute on driving LSI's [operating margin] from 17% to 30% over the next few years," given Avago has doubled its op. margin to 30% since its 2005 LBO.
- On the CC (transcript), CEO Hock Tan mentioned wireless sales are expected to rise over 60% Q/Q thanks to "the ramp of a new phone model and a North American smartphone customer" (a clear iPhone 6 reference). Demand for FBAR filters and related products in 4G phones remains strong.
- Wired infrastructure is expected to grow at a low-single digit rate (switch/router ASIC growth offsetting flat optical component demand), and enterprise storage is expected to see mid-single digit growth excluding the PLX acquisition.
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