Last paragraph is optimistic: "Synaptics Down; Sees 1Q Rev Down 9% To 10% From 4Q"
DOW JONES NEWSWIRES
July 29, 2005 10:08 a.m.
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By Donna Fuscaldo
Of DOW JONES NEWSWIRES
Shares of portable device supplier Synaptics Inc. (SYNA) plummeted in trading Friday after the company said it expects first-quarter revenue to decline 9% to 10% from its fiscal fourth quarter.
Citing growth in notebook demand weighted toward low-end models and lower visibility in the hard disk drive MP3 player market, the company expects revenue in its fiscal first quarter to come in between $51.1 million and $51.7 million, which is lower than the $55 million analysts expect, according to Thomson First Call. Synaptics did post a 62% increase in revenue during its fiscal fourth quarter.
News of the first-quarter revenue outlook sent shares of San Jose, Calif., Synaptics down 23.4% or $4.91, to $16.11, on volume of 5.5 million. Average daily volume is 759,900. The stock is more than 60% off its high of $41.19 set Feb. 4.
Joel Wagonfeld, an analyst at First Albany Capital, who cut his rating on shares of Synaptics to underperform from neutral, said the company's outlook confirms his "suspicion" that Synaptics will lose Apple Computer Inc.'s (AAPL) iPod business, which accounts for about 35% of Synaptics' revenue. According to Wagonfeld, revenue from Apple will likely disappear within two quarters. What's more, Wagonfeld said Synaptics other growth driver - mobile handsets - will take time to ramp up and will not serve as compensation for the loss of Apple.
"With Synaptics' major growth driver disappearing and ongoing uncertainty regarding the trajectory of its mobile handset ramp, we anticipate the combination of multiple contraction, reduced visibility and dramatically lower estimates will keep the stock from recovering meaningfully," wrote the analyst in a research report. Wagonfeld does not own shares of Synaptics and First Albany doesn't have an investment banking relationship with the company.
Officials at Synaptics and Apple weren't immediately available to comment.
Christopher Kinkade, an analyst at America's Growth Capital also thinks Synaptic's first quarter outlook implies the company lost Apple's iPod business. Still the analyst said excluding Apple, Synaptics business is growing and can grow at 18% in fiscal 2006.
"We continue to view (Synaptics) as an attractive play on growth trends in mobile computing and entertainment," wrote the analyst in a research report. "While recent guidance implies a loss of iPod business, the core SYNA business continues to broaden." America's Growth Capital intends to seek an investment banking relationship with Synaptics. Analyst Kinkade does not own shares of the stock.
By Donna Fuscaldo, Dow Jones Newswires; 704-371-4263; donna.fuscaldo@dowjones.com |
