Synaptics (SYNA 34.64-8.59, -19.87%) shares are
getting hit after the company warned about third quarter results and announced
the resignation of its CEO Richard Bergman in a late release on Friday.
Synapitcs develops semiconductors for touch screens. The company said third quarter results would be closer to the low end of its prior guidance calling for non-GAAP EPS of $0.70-1.00/share and revenue of $340-380 mln. The company cited demand softness in China.
The weak outlook comes after the company guided third quarter revenue below consensus just over one month ago. Synaptics has guided the midpoint of revenue below consensus five quarters in a row. A slowdown in the smartphone market is a key headwind. The company previously said 62% of third quarter revenue would come from the mobile segment while 20% would come from the internet of things (IoT) and 18% from PCs.
Semiconductors continued to rally last week after encouraging results from Broadcom (AVGO). A rally in semiconductor stocks implies optimism over a rebound in the Chinese market as well as hopes for a trade deal with the US.
The CEO exit marks the second key executive departure after CFO, Wajid Ali, resigned last month to become CFO at Lumentum (LITE).
Non-GAAP EPS was expected to grow ~12% in fiscal 2019 with revenue down 3%. Earnings peaked in fiscal 2015 and fell 17% last year.
Shares trade at less than 8x earnings estimates. The only stock cheaper in the semicondiuctor space is memory maker Micron (MU). Some 20% of the float is sold short.
The stock is testing lows hit in November of 2017 and 2018; below $33 would mark a six year low in the stock. Synaptics has a $1.2 bln market value; investors are hoping for new leadership that will provide some stability for the company.
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