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- Synaptics disappoints investors and analysts with its performance over the past quarter.
- Management appears to make excuses, citing changes in the product mix in order to explain gross margin compression.
- The strong balance sheet, a recent correction and fair valuation adds to the appeal.
Update: Synaptics - Seasonality Weighs On Earnings
- Synaptics earned $1.04, down 20.6% year-over-year, on $282.7 million in revenue, up 27% year-over-year, missing the consensus estimates.
- The company remains a strong buy, as the seasonal impact created a very strong buying opportunity.
- The event was not mentioned or anticipated in the previous piece. However, it was expected, as no flagship smartphone was launched in the quarter.
- Touch screen controller, display driver ICs, and fingerprint sensor industry is set to grow in coming years.
- Synaptics will grow alongside the industry, thanks to its leadership in touch IC and couple of decent acquisitions.
- Recent sell-off is a great opportunity to capitalize on valuation of Synaptics that is set to grow amid industry growth and Renesas SP consolidation.
- There is a high short interest in Synaptics destined to result in a short squeeze, and it will result in short-term gains for Synaptics' investors.
- A series of upgrades have escalated the confidence of investors in Synaptics Incorporated. The stock touched a new 52-week high in the past week as a result of heightened confidence.
- Fingerprint authentication, as a technology, has massive scope for Synaptics. After implementing the technology in Galaxy S5, Synaptics is all set to leverage well from innovation in this segment.
- The deal with Renesas could prove to be a major growth driver in coming quarters as Synaptics expands its market reach.
Synaptics: Great Acquisition, Great Operational Momentum, But Await A More Attractive Entry Point
- Synaptics acquires Renesas SP Drivers at very favorable relative valuation multiples.
- As the company reports very strong momentum for the final fourth quarter.
- Shares offer appeal, but await a pullback after a 40% run-up over the past few weeks.
Heavily Undervalued, High-growth, High-margin Company
A Cheap Play On The Success Of Microsoft's Surface
Thu, Jun. 5, 9:55 AM
- A week after reports emerged Synaptics (SYNA +1.2%) is set to buy a 55% stake in Renesas' LCD driver IC unit, Feltl has upgraded shares to Strong Buy.
- Street commentary on Synaptics' rumored deal has been quite positive. Chardan has argued Synaptics could take share from Himax at Samsung and Chinese OEMs, and Needham has praised the company's "platform" approach to capacitive touch (involving touch controllers, display drivers, and fingerprint sensors).
- Shares +30% YTD, and not far from a 52-week high of $69.
Wed, May. 28, 11:52 AM
- It's "unlikely" that Google would drop Himax (HIMX +5.5%) as a Glass supplier given its stake in the company, writes Northland's Tom Sepenzis following rumors to the effect. At the same time, he thinks Google might be trying to "work out better terms."
- Meanwhile, Topeka's Suji De Silva believes concerns about Synaptics' (SYNA +10.4%) reported plans to buy a 55% stake in Renesas' LCD driver IC unit fueled yesterday's sharp Himax selloff.
- De Silva thinks those concerns are overblown: He doesn't believe Renesas has the kind of "global, multi-market customer relationships" Himax has developed (ed: couldn't Synaptics help out with that?), and argues Himax "benefits from a more robust and diversified display technology product portfolio."
- He also points out the deal's reported price suggests Synaptics is paying ~2x sales, a major premium to Himax's current valuation of <1x EV/sales.
- Chardan's Jay Srivasta, who recently cut Himax to Sell, is less sanguine: He thinks Synaptics could take share from Himax at Samsung (also a major Synaptics client) and Chinese OEMs in time, while pressuring ASPs.
- Pac Crest is out with another bullish note on Synaptics. The firm thinks shares could rally to the $90-$110 range if the Renesas deal goes through.
Tue, May. 27, 3:54 PM
- Renesas (RNECF) plans to sell its 55% stake in iPhone LCD driver IC supplier Renesas SP Drivers to Synaptics (SYNA +2.2%), Reuters reports.
- Apple (AAPL +1.9%), which already develops its own app processors and fingerprint sensors, was previously reported to be interested in buying the stake for $479M. Reuters' sources state the talks failed to make progress.
- Sharp (SHCAY) is expected to sell its 25% stake in the unit after Renesas makes its move. Renesas SP's LCD drivers stand to complement Synaptics' touchscreen controller and fingerprint sensor offerings for mobile OEMs.
- Renesas SP had revenue of $575M in the fiscal year ending March 31. Syanptics is expected to post FY14 (ends in June) revenue of $918M.
Tue, May. 6, 3:52 PM
- Digitimes reports Samsung (SSNLF) "putting in weaker-than-expected handset component orders to the supply chain" amid toughening competition, particularly in China. The site adds Samsung, which last month launched its latest flagship (the Galaxy S5), is mostly expected to cut orders for cheaper smartphones.
- The report comes a few days after InvenSense (INVN -2.8%) offered a soft June quarter outlook, while estimating Samsung will return to accounting for a mid-30s % of revenue after making up 47% of March quarter sales.
- Strategy Analytics estimates Samsung saw its smartphone share fall 120 bps Y/Y to 31.2% in Q1 (89M shipments out of 285M), following many quarters of steady share gains. Strategy also estimates Lenovo (LNVGY) grew its share to 4.7% from 3.9%, and that Huawei's share was steady at 3.9%.
- Other Chinese OEMs, including Xiaomi, ZTE, and Coolpad, have also been seeing healthy shipment growth amid an industry mix shift towards cheaper phones aimed at emerging markets. Xiaomi (also a major InvenSense client) is looking to roughly double its shipments in 2014 to 40M.
- Other suppliers with heavy Samsung exposure: OLED, MXIM, SYNA, ANAD.
Thu, Apr. 24, 5:41 PM
Thu, Apr. 24, 5:10 PM
- Cirrus Logic (CRUS) expects FQ1 revenue of $135M-$155M, largely above a $135.5M consensus. Gross margin is expected to be in a range of 47%-49% after coming in at 49% (at the high end of a 47%-49% range) in FQ4. Shares +3.3% AH after rising 7.3% in regular trading thanks to Apple. (FQ4 results, PR)
- Synaptics (SYNA) expects FQ4 revenue of $275M-$295M, well above a $231.3M consensus. Mobile revenue rose 44% Y/Y in FQ3, and the company's fingerprint ID ops (i.e. Validity Sensors) have become accretive ahead of plan.Shares +10.5% AH. (FQ2 results, PR)
- CalAmp (CAMP) expects FQ1 revenue of $56M-$60M and EPS of $0.17-$0.21, below a consensus of $64.3M and $0.23. The company notes revenue from a key solar OEM client is expected to fall by $3M Q/Q. Shares -9.9% AH. (FQ4 results, PR)
Thu, Apr. 24, 4:12 PM| Comment!
Thu, Apr. 17, 2:46 PM
- Cypress (CY +1.2%) guided on its Q1 CC for Q2 revenue of $181M-$186M ($183.5M midpoint) and EPS of $0.11-$0.13 vs. a consensus of $182.8M and $0.12.
- Shares are posting moderate gains after initially trading lower following the chipmaker's Q1 results, which featured in-line EPS and a small revenue beat.
- A slightly soft gross margin (50.3%, -70 bps Q/Q and -40 bps Y/Y) pressured EPS. On the other hand, quarter-ending book-to-bill was a healthy 1.08.
- Touch controller rival Synaptics (SYNA +5.4%) is posting big gains on what's proving a good day for chip stocks (SOXX +2.2%).
Mon, Apr. 14, 2:53 PM
- U.S. first-day Galaxy S5 sales were up 30% relative to first-day S4 sales a year ago, Samsung (SSNLF) declares. The electronics giant also states sales in certain other markets doubled Y/Y.
- Pac Crest's checks also paint a favorable picture of U.S. S5 sales: The firm estimates average inventory sell-through hit 60% within four hours, and thinks sales were especially strong at Verizon thanks to a 2-for-1 promotion.
- Needham thinks S5 sales could reach 10M sales in 25 days vs. 27 for the S4. The firm is reiterating a Buy on touch controller/fingerprint sensor supplier Synaptics (SYNA +3.7%).
- Two caveats: 1) Samsung's numbers typically measure sell-in to carriers/distributors rather than consumer sell-through. 2) S4 sales also got off to a hot start, but later slowed down.
- Compared with the S4, Samsung has taken a no-frills approach with the S5, emphasizing practical features such as waterproofing/dust-resistance over sensor-based features (Smart Pause, Smart Scroll, etc.) often derided as gimmicks. The company has also provided modest discounts relative to the S4 (the S5 still typically goes for $600+ unsubsidized), as it contends with aggressive high-end pricing from Chinese Android rivals.
- Synaptics is outperforming, as is motion sensor supplier InvenSense (INVN +1.7%), which gets over 30% of its revenue from Samsung. S5 OLED materials supplier Universal Display (OLED +0.6%) is up slightly. Synaptics reports on April 24, and InvenSense on May 1.
Mon, Mar. 31, 6:52 PM
- An early teardown (translation) of Samsung's (SSNLF) Galaxy S5 has turned up the same 6-axis InvenSense (INVN) motion sensor found in the Note 3. The InvenSense part displaces the STMicroelectronics (STM) motion sensor found in the S4.
- Multiple Maxim (MXIM) power ICs were also uncovered. Though Barclays thinks Maxim lost the gesture IC slot it had in the S4 to rival AMS, it nonetheless thinks its dollar content grew ~10% (previous).
- An NXP (NXPI) NFC controller/secure element displaced the Broadcom (BRCM) NFC chip that went into the S4; Barclays estimates the design win will be worth $50M-$60M to NXP, assuming average content of $1. Broadcom is still expected to get $4/unit for supplying the S5's Wi-Fi/Bluetooth combo chip.
- Synaptics (SYNA) is believed to have the S5's touch controller slot and (though not revealed in the teardown) its fingerprint/swipe sensor slot. The company's S4 touch controller win delivered a windfall.
- Though a Skyworks (SWKS) power amplifier module and discrete amplifier were found, and a Wi-Fi filter is believed to be present, Barclays thinks Skyworks' content share likely fell, thanks to the absence of Wi-Fi switch/LNA content. It also thinks the total value of the S5's Wi-Fi RF content is lower due to Broadcom's use of internal power amplifiers (possibly a negative for S4 supplier ANAD).
- Separately, DisplayMate calls the S5's OLED display "the best-performing smartphone display we have ever tested," after doing an in-depth analysis. The display's color accuracy, brightness, ambient lighting performance, and power efficiency all receive high marks. OLED materials/tech supplier Universal Display (OLED) will be happy to hear that.
Mon, Feb. 24, 2:40 PM
- As expected, Samsung (SSNLF, SSNGY) has unveiled its next-gen flagship smartphone at a Mobile World Congress event (live blog). Whereas the Korean electronics giant trumpeted a variety of bells and whistles (some might say gimmicks) when launching the Galaxy S4 a year ago, it's taking a more low-key approach with the S5.
- The S5 has a 5.1" display, just slightly larger than the S4's 5" display. The resolution is unchanged at 1080p; past reports had pointed to a 2K resolution. Like Apple (AAPL) with the iPhone 5S, Samsung is integrating a fingerprint sensor into the S5's home button, and is offering a gold model.
- A 16MP camera supporting 4K video recording is included (the S4 has a 13MP camera), as is a perforated back meant to provide better grip. Qualcomm's (QCOM +0.2%) Snapdragon 801 baseband/app processor (2.5GHz., quad-core) powers the device. A heart rate monitor and slightly larger battery are also on board.
- Remarks from co-CEO JK Shin point to a shift in Samsung's product philosophy, one that arguably meshes with reports of a deal with Google to tone down Samsung's efforts to customize its hardware. "Our consumers do not want eye-popping technology or the most complex technology."
- Likely S5 suppliers with strong exposure: OLED, MXIM, SYNA, ANAD
Tue, Feb. 4, 2:07 PM
- Samsung (SSNLF) has sent out invites for a Feb. 24 event at the Mobile World Congress that's expected to feature the launch of the Galaxy S5. Separately, Korean and Indian sites indicate the S5, like the S4, will eventually be accompanied by a water/dust-resistant Active version, and a Zoom version featuring a camera with an optical zoom.
- The timing of the S5 event is three weeks ahead of when the S4 launched last year.
- The S5 is expected to have ~5.25" display with a whopping 2K (2560x1440) resolution, a 16MP camera, and a fingerprint sensor. It might also ship in both a costlier metal version and a cheaper plastic version.
- The launch of Samsung's next flagship will follow a downbeat Q4 report, and a reported deal with Google in which Samsung agreed to tone down its efforts to offer custom apps/UIs for its Android hardware.
- Samsung is facing stiffening competition from Chinese OEMs as Android sales continue seeing a mix shift towards cheaper hardware (often sold in emerging markets). Following an epic rise from 2011-2013, IDC estimates Samsung's smartphone share fell 30 bps Y/Y in Q4 to 28.8%.
- Companies likely to have strong S5 exposure (as a % of total revenue): OLED, ANAD, SYNA, RFMD, MXIM.
Fri, Jan. 24, 2:48 PM
- Synaptics' (SYNA +5.6%) FQ2 revenue beat and strong FQ3 guidance are overshadowing an FQ2 EPS miss, as investors bet the strong mobile performance delivered by the company in 2013 will continue in 2014.
- Feltl & Co.'s Jeffrey Schreiner has upgraded shares to Buy, and suspects Synaptics, already believed to be the touchscreen controller supplier for Samsung's Galaxy S5, has also won (via its Validity Sensors unit) a fingerprint sensor design for the S5. He notes Synaptics now expects the Validity acquisition to be accretive by the end of FY14 (ends June '14), sooner than previously expected, and that reports indicate the S5 will have a fingerprint sensor.
- Synaptics' mobile sales (65% of total revenue) rose 64% Y/Y in FQ2 after growing 152% in FQ1 following a string of major design wins. PC sales (35% of total) grew 17% a quarter after dropping 4%. Synaptics has been trying to grow PC sales in the face of weak industry demand by selling more advanced touchpad solutions such as the ClickPad (supports touch gestures) and ForcePad (detects finger pressure).
- CC transcript
Thu, Jan. 23, 4:49 PM
- Juniper (JNPR) expects Q1 revenue of $1.12B-$1.16B and EPS of $0.27-$0.30, in-line with a consensus of $1.14B and $0.29. Shares +0.3% AH. (Q4 results, PR)
- Synaptics (SYNA) expects FQ3 revenue of $180M-$200M vs. a $184M consensus. The guidance factors in revenue from the recent Validity Sensors acquisition. Shares -1.4% AH. (FQ2 results, PR)
- Altera (ALTR) expects Q1 revenue to be down 2%-6% Q/Q. That implies a range of $427M-$445M, below a $447.7M consensus. Shares +0.2% AH. (Q4 results, PR)
- Dolby (DLB) expects FQ2 revenue of $240M-$250M and EPS of $0.59-$0.66 vs. a consensus of $251M and $0.57. The company forecasts FY14 (ends Sep. '14) revenue of $910M-$940M, above a $909.5M consensus. Shares -0.2% AH. (FQ1 results, PR)
Thu, Jan. 23, 4:12 PM| Comment!
Thu, Jan. 23, 12:10 AM
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Synaptics Inc is a developer and supplier of custom-designed human interface solutions that enable people to interact easily and intuitively with mobile computing, communications, entertainment, and other electronic devices.
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