Synaptics Shares Fall On AmTech Downgrade

Includes: HPQ, SYNA
by: Eric Savitz

Synaptics (NASDAQ:SYNA) shares haven fallen hard Thursday following a downgrade of the stock by American Technology Research analyst Jeff Schreiner, who cut his rating to Hold from Buy. He says the company’s loss of market share in the PC sector “could potentially be underestimated.” Schreiner thinks SYNA has lost some of its PC touchpad business to Alps, particularly with Hewlett-Packard (NYSE:HPQ). He thinks the company could lost as much as 25% of its HP business.

Schreiner says industry checks suggest the company could beat guidance for the December quarter, and that March should be in line with guidance. But he says that during the June quarter, “potential share loss within PCs could begin to emerge.” He says that new design wins such as the Asus EEE PC will not be enough to offset share loss. He does say that strong uptake of touch in handsets seems more likely in the second half, and adds that he might become more positive on the stock if handset growth exceeds estimates.

For 2008, Schreiner cuts his revenue estimate to $387 million from $430 million. Pro forma EPS is now $2.35, down from $2.89.

Synaptics Thursday is off $5.32, or 13.8%, to $33.11.