Tag Archives: adi

Apple Supplier Broadcom: ‘Multiple Ways To Win’ On iPhone 7 Gains

Apple ( AAPL ) supplier Broadcom ( AVGO ) likely gained another 20% in iPhone 7 content on top of continued increases in Samsung Galaxy smartphones, giving investors “multiple ways to win,” Credit Suisse analyst John Pitzer said Thursday. Broadcom is slated to report Q2 earnings on June 2 after the market close. Pitzer expects in-line Q2 sales, but he sees a “significant EPS cushion” on cost-cutting and synergies related to Broadcom’s merger with the former Avago. In February, Avago completed its $37 billion acquisition of Broadcom, with the merged company taking the Broadcom name, in a deal the companies said gives the combined entity an enterprise value of $77 billion. For Q2, the consensus of 30 analysts polled by Thomson Reuters expects Broadcom to report $3.55 billion in sales and $2.38 earnings per share minus items, up 116% and 12%, respectively, vs. the year-earlier quarter. On Wednesday, fellow Apple supplier Analog Devices ( ADI ) reported year-over-year sales declines for fiscal Q2 and guided to another 5% sales dip for its July quarter. Pitzer expects Broadcom’s July-quarter sales view to likewise disappoint. But, like Analog Devices, Broadcom expects to grow its iPhone 7 content . Three months ago, CEO Hock Tan said Broadcom’s radio-frequency (RF) content in smartphones has increased by 20% every year, and that this year will be no exception. Tan’s view came before Apple reported its first-ever decline in iPhone sales, occurring in the March quarter. Pitzer sees Broadcom guiding to $3.39 billion in fiscal Q3 sales, below the consensus view for $3.72 billion. But he boosted his EPS-minus-items view to $2.64 from $2.51, matching the consensus model. For 2016 and 2017, he expects $11.16 and $12.86 EPS ex items, respectively. Wireless sales — including sales to Apple — have declined to 25% of total revenue from 50%. Less volatile data center sales now account for half of Broadcom’s revenue, he wrote. “Broadcom’s portfolio of businesses is significantly dampening the impact of any single headwind,” he wrote in a research report. “Broadcom can weather ‘isolated storms’ while maintaining the integrity of EPS upside.” Pitzer reiterated an outperform rating and a 180 price target on Broadcom stock. Broadcom shares were down 1%, near 142, in afternoon trading on the stock market today . RF rivals Skyworks Solutions ( SWKS ) and Qorvo ( QRVO ) were down a respective 1.4% and 0.4%. The trio fell amid fresh reports examining the effect slowing smartphone sales will have on chipmakers.

Apple iPhone 7 Ramp In July Will Stoke Q4 Sales: Analog Devices

Apple ( AAPL ) iPhone 7 demand could falter, but 3D Touch supplier Analog Devices ( ADI ) expects a strong fiscal Q4 on boosted dollar-content in Apple’s newest flagship smartphone, likely to be released in September. But that ramp won’t be apparent in Q3. Wednesday, Analog Devices reported  sales fell 5% year over year for its fiscal Q2 ended April 30, and guided to another 5% dip in Q3. Over the past two years, Analog Devices has grown an average 13.5% during its July quarter. This year, Analog Devices’ second-generation 3D Touch will ramp in timing with chips from other Apple suppliers, Analog Devices CFO Dave Zinsner told analysts during the company’s Q2 earnings conference call. “And really that means that we really don’t see the demand pick up until the July time frame,” he said. “So, it’s probably going to be more of the end of Q3 and more into Q4 this time vs. last year where it was more of a ramp in Q3.” Analog Devices’ Q3 will be back-end loaded on Apple’s iPhone 7, Edward Jones analyst Bill Kreher told IBD. More encouraging, the company is seeing stable demand within its automotive and industrial segments, he says. “The outlook suggests the company is weathering the near-term softness in Apple,” he said. “And, as it relates to Apple, the company indicated this would be a trough in terms of orders. They expect to see sequential growth, and from that perspective it is encouraging because there will be a ramping in orders.” MKM analyst Ian Ing reiterated a neutral rating and 56 price target on Analog Devices stock. In morning trading on the stock market today , Analog Devices stock was down more than 1%, near 55, after rising nearly 1% on Wednesday. Despite Zinsner’s expectations for boosted dollar-content in the iPhone 7, Ing sees average sales prices for the second-generation 3D to fall 10% from $1.75. Consumer sales account for 10% of Analog Devices’ revenue and fell 27% vs. the year-earlier quarter in Q2. But Ing doesn’t expect much of a Q3 boost for Analog Devices’ bread-and-butter business-to-business segments, which account for the other 90% of sales. Those segments grew 9% sequentially in Q2 to $698.7 million, but fell 2% vs. the year-earlier quarter. Analog Devices guided to mid-to-high single-digit year-over-year growth for those segments in Q3. For Q4, the company expects greater operating leverage, a full quarter of portables shipments, higher factory utilizations and better automotive seasonality, Ing wrote. But lower factory utilizations in Q3 suggests “little visibility or confidence in the overall demand environment,” Ing wrote. Analog Devices guided down to 60%-range utilizations for Q3 vs. 70% in the year-earlier quarter. The goal is to cut down on inventory, the company says. “The macro environment for Analog Devices business-to-business segments remains mixed at best,” Ing wrote.

Does Analog Devices’ Soft Q3 Guidance Prove Apple’s iPhone 7 Cut?

Apple ‘s ( AAPL ) iPhone 7 expectations might have dug into guidance provided Wednesday by  Analog Devices ( ADI ), as the 3D Touch supplier topped Q2 expectations but guided to current-quarter sales that would dip 5% year over year. In early trading on the stock market today , Analog Devices shares were up a fraction, near 55.50. Fellow Apple suppliers Broadcom ( AVGO ), NXP Semiconductors ( NXPI ),  Skyworks Solutions ( SWKS ) and  Qorvo ( QRVO ) were up all by close to 2% or more. For its fiscal Q2 ended April 30, Analog Devices reported $779 million in sales and 64 cents earnings per share ex items, down a respective 5% and 12% vs. the year-earlier quarter. It was the first quarter in nine that Analog Devices’ sales have fallen and the second period of declining EPS. But both metrics beat the consensus of 29 analysts polled by Thomson Reuters for $777.6 million and 62 cents, as well as Analog Devices’ own guidance issued three months ago. Consumer sales toppled 27% year over year, leading a 3% fall in communications sales, Analog Devices said. Industrial and automotive sales — Analog Devices’ bread-and-butter segments — fell 1% apiece. For fiscal Q3, Analog Devices CEO Vincent Roche sees a return to consumer market growth and mid- to high-single-digit growth in the company’s business-to-business segments. But the high point of ADI’s Q3 sales and EPS guidance lagged Wall Street consensus. Analog Devices guided to $800 million to $840 million in sales and 66-74 cents, down a respective 5% and 9% vs. the year-earlier quarter, missing analysts’ model for $846.6 million and 75 cents. On average, Analog Devices’ Q3 sales have grown 13.5% year over year, trailing 20% growth in Q4. But recent reports indicate Apple might have cut its component orders for the iPhone 7, expected to be released in September.