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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 .

InvenSense Sales Expected To Topple After Apple iPhone Shortfall

Apple ‘s ( AAPL ) iPhone shortfall could draw InvenSense ( INVN ) into the tornado late Monday when the sensor-chipmaker is expected to report its first-ever sales decline and its biggest earnings fall to date. InvenSense stock toppled 5.5% to 7, falling the most of IBD’s 41-company Electronic Semiconductor-Fabless industry group which was up a fraction on the stock market today . Fellow Apple suppliers Broadcom ( AVGO ) and Qualcomm ( QCOM ) stocks rose 1.2% and 0.1%, respectively, vs. flat shares of NXP Semiconductors ( NXPI ) and Cirrus Logic ( CRUS ). InvenSense follows radio-frequency supplier Qorvo ( QRVO ), which reported earnings last Wednesday. The consensus of 13 analysts polled by Thomson Reuters models $79.9 million in sales and 2 cents earnings per share ex items for InvenSense’s fiscal Q4. On a year-over-year basis, sales and EPS would be down 20% and 83%, respectively. It would be InvenSense’s fifth straight quarter of decelerating sales growth, and the first time the Apple supplier has seen sales fall vs. the year-earlier quarter. Earnings fell 14% last quarter. Three months ago, InvenSense guided to $77 million to $83 million in sales and 0-2 cents EPS ex items. During the January conference call, CFO Mark Dentinger noted a step-down at “the North American customer” — widely assumed to be Apple — and lighter sales in Korea. He expected Internet of Things sales to help fill those holes. On April 26, Apple reported its first-ever year-over-year iPhone sales decline and its first revenue drop since 2003. Teardowns show InvenSense supplies a gyroscope/accelerometer combination chip for the iPhone 6S. But InvenSense is forecast for 13% sales and 2% EPS growth in fiscal 2016 to $420.9 million and 47 cents, respectively, on healthier metrics earlier in the year. Apple shares rose 1% intraday after hitting a 2-year low on Friday.

Qorvo Sees June ‘Up Significantly’ Despite Apple iPhone Albatross

Qorvo ( QRVO ) skirted Apple ‘s ( AAPL ) iPhone shortfall by regaining Samsung Galaxy S7 share and riding the Chinese carrier aggregation trend, Needham analyst Quinn Bolton said Thursday after the chipmaker’s blowout fiscal Q4. In morning trading on the stock market today , Qorvo stock was up 8%, trading near a three-week high above 48. But shares are down 12.5% year to date on Apple’s weakness. Qorvo’s largest customer — widely assumed to be Apple — accounts for a third of its total sales. Shares of rivals Broadcom ( AVGO ) and Skyworks Solutions ( SWKS ) were up a fraction Thursday morning, after  Qorvo’s fiscal Q4 beat  late Wednesday. Last week, Skyworks topped fiscal Q2 expectations, but its fiscal Q3 sales guidance lagged by about $50 million, helping send its shares down 6.9%. For Qorvo, the March quarter wrapped up with $608.1 million in sales and $1.04 earnings per share minus items, beating the consensus of 20 analysts polled by Thomson Reuters for $599.2 million and 92 cents. Year over year, sales and EPS fell 4% and 6%. Current-quarter guidance for $650 million in sales and $1.05 EPS ex items was also ahead of analysts’ views for $628.6 million and 96 cents, but that would be down 6% and 12% vs. the year-earlier quarter. On Thursday, at least four analysts boosted their price targets on Qorvo stock. Offsetting Apple’s 24% Fall Mobile sales declined 5% sequentially to $465 million, “driven by content gains on the Galaxy S7 platform that mostly offset a 24% quarter-over-quarter decline in sales to its largest customer,” Bolton wrote in a research report. Industrial and defense products rose 9% to $142 million in sales, also helping offset the hit from Apple, Bolton wrote. Bolton boosted his price target on Qorvo stock to 53 from 50 and reiterated his buy rating. Qorvo is “outperforming smartphone peers with content and share gains,” he said. Behind Apple, Samsung and Huawei are Qorvo’s largest mobile customers, Qorvo CFO Steven Buhaly said on the company’s earnings conference call late Wednesday. Qorvo “took the medicine” in December when Apple iPhone sales began slowing, he said. Outside Apple, mobile sales will be “up significantly” in the June quarter, Steven Creviston, Qorvo’s president of mobile products, said on the call. He credited growth in China and the carrier aggregation trend for the likely growth. In that segment, sales to Chinese ODMs (original design manufacturers) account for 40% of revenue. Carrier aggregation in China is driving demand for Qorvo’s radio-frequency chips, Qorvo CEO Robert Bruggeworth said on the call. Rosenblatt analyst Jun Zhang expects Qorvo to swipe Skyworks’ share on that trend. At Taiwanese MediaTek, Skyworks accounts for 80%-85% of all LTE chipsets, Cowen analyst Timothy Arcuri wrote in a report. He, too, expects Qorvo to aggressively gain share, boosting his price target to 55 from 50 but keeping his market perform rating.