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Why Silicon Labs, Sierra Wireless, Cirrus Logic, and NXP Semiconductors Stocks Tanked Today

What happened

The coronavirus pandemic continues to drive an historic stock market sell-off, which has now put all major indexes firmly into bear market territory. As of noon EDT, here's how deeply in the red several semiconductor stocks are trading:

  • Silicon Laboratories (NASDAQ: SLAB): down 10%.
  • Sierra Wireless (NASDAQ: SWIR): down 12%.
  • Cirrus Logic (NASDAQ: CRUS): down 10%.
  • NXP Semiconductors (NASDAQ: NXPI): down 10%.

Image source: Getty Images.

Silicon Labs

Silicon Labs updated its guidance this morning to warn investors that it would miss its previous outlook due to the outbreak. "Due to the uncertain and evolving public health outlook resulting from COVID-19, we are seeing an impact on first quarter demand and are updating our guidance accordingly," CEO Tyson Tuttle said in a statement. "While all of our Asia-Pacific-based suppliers have resumed operations, there are some minor ongoing impacts on our supply chain."

Revenue in the first quarter is now expected to be $200 million to $205 million, down from the previous outlook of $209 million to $219 million in sales. Adjusted earnings per share should be $0.49 to $0.53, compared to the prior range of $0.57 to $0.67 per share. Separately, Silicon Labs said it would acquire Redpine Signals' connectivity business for $308 million in cash to expand its Internet of Things (IoT) wireless platform.

Sierra Wireless

Sierra Wireless reported fourth-quarter results about a month ago, and at the time did not factor in the coronavirus impacts to its 2020 guidance, which calls for revenue of $690 million to $710 million this year. That was about the time that China was coming off its Chinese New Year holiday and contract manufacturers were starting to reopen factories. More recently, the company filed its annual report and acknowledged the risks to its supply chain:

In particular, the current outbreak of the novel coronavirus (COVID-19) that was first reported in Wuhan, China, on December 31, 2019, is impacting production by our contract manufacturers in China. The outbreak of coronavirus may also impact customer demand, the availability of key components sourced from China, logistics flows and the availability of other resources to support critical operations in the Asia Pacific region. If we are unable to mitigate the impacts of the novel coronavirus outbreak on our operations, we may be unable to fulfill our product delivery obligations to customers, our costs may increase, and our revenue and margins could decrease.

Cirrus Logic

When Cirrus Logic reported results in late January, it did not provide much commentary on the coronavirus other than to acknowledge the emerging threat. CEO Jason Rhode said that the company was taking a "conservative view of what will happen." Cirrus Logic did add the disease to its risk factors in regulatory filings.

Apple, which accounted for an overwhelming 83% of Cirrus Logic's revenue in the fiscal third quarter, warned last month that it would miss its own revenue guidance due to the crisis. Declining iPhone sales will inevitably drag down Cirrus Logic's top line as well.

NXPI Semiconductors

At the beginning of March, NXPI slashed its guidance, too. The company expects revenue to take a hit of $50 million to $150 million due to the coronavirus.

"From a business perspective, the impact is very much an estimate at this time, based on business trends over the last several weeks post the Lunar New Year holiday," CEO Richard Clemmer said at the time. "What we have seen is lower than expected sell-through and order push outs in both our distribution channel and with direct customers."

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Sierra Wireless. The Motley Fool recommends Cirrus Logic, NXP Semiconductors, and Silicon Laboratories. The Motley Fool has a disclosure policy.


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