Bearish: Chip Makers Plunge after Missing on Earnings

05:08 10/24/2018

Chip makers can’t catch a break this week. All thanks to weaker than expected earning and guidance. For example, AMD AMD  fell nearly 20% after posting third quarter earnings that fell below Street estimates. EPS of 13 cents was above expectations for 12 cents. Unfortunately, revenue of $1.65 billion fell short of $1.7 billion expectations. The company guided for fourth quarter revenue of $1.45 billion, which is below estimates of $1.6 billion. Another chip name, Texas Instruments TXN  fell this week after poor earnings, too. It posted $4.26 billion in revenue, falling short of estimates of $4.3 billion. However, TXN did post better than expected EPS of $1.58, as compared to estimates for $1.53. Then TXN made a mess by issuing a weaker than expected fourth quarter outlook. It now expects to earn between $1.14 and $1.34 a share on revenue of between $3.6 billion and $3.9 billion. The Street was looking for $1.38 EPS on revenue of $4 billion. According to CNBC, “The company said slowing demand indicates that customers may be looking ahead to the looming trade war between the U.S. and China. David Pahl, vice president and head of investor relations, said on the earnings call that the company is not stocking up on its inventory ahead of tariff implementation. He said that 60 percent of revenue is on consignment, so there is no inventory buffer.” It's a good idea to avoid these stocks, near-term.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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