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Stocks of Apple Suppliers Fall on SWKS’s and QRVO’s Weak Guidance

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Feb. 8 2019, Published 10:34 a.m. ET

Stocks of Apple suppliers fall

The stocks of Apple (AAPL) and its chip suppliers reported further falls as Apple’s radio-frequency and mobile communications systems suppliers Skyworks (SWKS) and Qorvo (QRVO) reported weaker-than-expected guidance for their coming quarters. These two stocks fell more than 3% each on February 7. The stocks of other Apple suppliers Broadcom (AVGO), Cirrus Logic (CRUS), Cypress Semiconductor (CY), and Texas Instruments (TXN) fell more than 2% each.

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This overall decline is likely to continue on February 8. Qorvo reported its fiscal 2019 third-quarter earnings results (for the period that ended on December 29, 2018) on February 7. While its earnings beat analysts’ estimate, its guidance missed analysts’ estimate by a margin of 13%, sending the stock down 3.4% in after-hours trading.

Qorvo’s fiscal 2019 third-quarter earnings highlights

In the third quarter of fiscal 2019, Qorvo’s revenue fell 6% sequentially and 1.7% YoY (year-over-year) to $832 million, beating analysts’ estimate and its revised guidance of $820 million. Its revenue fell due to a weak macroeconomic environment and low orders from Apple.

As we can see in the graph above, Qorvo’s YoY fall was lower than Skyworks’ YoY fall of 7.6%. Texas Instruments’s revenue fell just 1% YoY while Cypress’s revenue rose 1% YoY due to their limited exposure to Apple and their diversified customer bases, especially in the automotive and industrial markets. Among all suppliers, the biggest fall of 32% was reported by audio chip supplier Cirrus Logic, which earns 67% of its revenue from Apple.

Qorvo’s non-GAAP (generally accepted accounting principles) EPS rose 9% YoY to $1.85 in the third quarter of fiscal 2019, beating analysts’ estimate of $1.7.

Qorvo’s fiscal 2019 fourth-quarter guidance

While Qorvo’s fiscal 2019 third-quarter earnings beat analysts’ estimate, its fiscal 2019 fourth-quarter revenue guidance of $670 million missed analysts’ estimate of $728 million by 13%. Its $670 million guidance represents a YoY rise of 1% but a sequential fall of 19%. Its non-GAAP EPS guidance of $1.05 missed analysts’ estimate of $1.33 by 21%. The magnitude of the revenue miss sent Qorvo stock down 3% in after-hours trading.

Like Skyworks, Qorvo is diversifying beyond mobile to the Internet of Things, and it’s eyeing 5G opportunities for future growth.

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