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



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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