Tag Archives: swks

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.

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.

Apple Falls Anew Amid iPhone 7 Worries, Chip Stocks Follow

Apple ( AAPL ) stock tumbled to its lowest level in nearly two years on Thursday, following a report that Asian component suppliers are seeing weak orders related to the upcoming iPhone 7. Japanese business publication Nikkei Asian Review reported Thursday that Taiwan-based tech suppliers expect to get significantly fewer orders from Apple in the second half of this year compared with the year-earlier period. They cited the “ongoing slump in demand for premium smartphones and a lack of groundbreaking features for the upcoming iPhone 7.” Nikkei Asian Review this week also reported that Taiwan Semiconductor Manufacturing ( TSM ) expects its iPhone chip shipments for the June-to-December period will be about 70% to 80% of the level reached in the second half of 2015. Credit Suisse analyst Kulbinder Garcha said the market overreacted to the Nikkei report. The prediction that iPhone builds would be down 20% to 30% in the second half of the year vs. the same period in 2015 was expected and already should have been baked into the stock’s price. “While the news is clearly disappointing, it was already largely included in our iPhone unit estimates,” he said in a report Thursday. Elsewhere, Taiwan-based contract manufacturer Foxconn Technology Group said its first-quarter net profit fell 9.2% from a year earlier, as it was hit by a slowdown in iPhone sales, the Wall Street Journal reported Thursday . Foxconn is Apple’s main iPhone assembler. Apple shares were down more than 2.5%, near 90, in afternoon trading on the stock market today . TSM shares were down 1%, near 23. IBD’s Take: How healthy is Apple’s stock and how does it stand up vs. rivals? Find out at IBD Stock Checkup . Other Apple chip suppliers were down Thursday as well, including InvenSense ( INVN ), NXP Semiconductors ( NXPI ), Cirrus Logic ( CRUS ), Broadcom ( AVGO ), Skyworks Solutions ( SWKS ), Qorvo ( QRVO ) and Texas Instruments ( TXN ). Apple stock has risen in only four of the last 20 trading sessions. Since hitting its 2016 high of 112.39 on April 14, Apple stock has fallen about 20%. Most of the decline happened after the Cupertino, Calif.-based company reported March-quarter results and gave June-quarter guidance on April 26. For its fiscal Q2, Apple posted its first year-over-year sales decline since 2003 and its first-ever drop in iPhone unit sales. For the current Q3, Apple is targeting sales of $42 billion, down 15% from the same period last year. Demand for Apple’s latest handsets, the iPhone 6S series, has been relatively weak, and hopes for a return to unit sales growth have shifted to the iPhone 7, expected to be released in September. The iPhone 7 is predicted to feature a slimmer design, a speedier processor and a better camera. It also might be waterproof for the first time, according to tech news reports. But it is expected to look pretty much like the current models, with tweaks like the lack of an audio headset jack. RELATED: Apple Stock Gets Price-Target Cut On Longer iPhone Upgrade Cycle .