Synaptics Losing iPod Business, Cautious on Consumer Spending (SYNA 3Q05 (F1Q06) Conf Call Quotes)

| About: Synaptics Incorporated (SYNA)
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Synaptics (ticker: SYNA), maker of touchpad products for PCs and MP3 players, reported fiscal first quarter results that beat analyst estimates, but cautious guidance and investor concern for its diminished Apple iPod business (the iPod Nano and Video do not contain SYNA's product) drove the stock down about 5% since the earnings release. Key data points and excerpts from the SYNA conference call:

  • Earnings: $5.5 million (20 cents per share)
  • Revenue: $51.7 million (up 36% from $38.1 million in F1Q05)
  • Gross margins: 45.8%
  • Guidance for F2Q06: Revenue between $46-50 million

Synaptics CEO Francis Lee commented on competitor Cypress' PSoC solution, which is in the Apple iPod Video:

we respect all competition, and we’re not taking Cypress lightly. But, we really believe in strategy in terms of offering total integrated solutions with all the pieces of the technology together… We can confirm that the most recent [iPod] product launches announced do not include Synaptics’ solutions.

And on guidance going into 4Q05:

we certainly have much less visibility this year than we did last year. I think going into the December quarter last year, our backlog was in excess of $39 million as compared to the $19 million we have entering the December quarter of 2005… our view of the way the December quarter’s going to, I think, pan out is primarily a reflection of how strong consumers show up in the notebook space. I think on the margin, corporate demand in notebooks could be a net positive. But, we think the overall quarter will depend largely on consumer spending.

(Quotes are from the CCBN StreetEvents transcript.)