Get Ready, TriQuint is Ready to Roll
Harsh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I knew it, and I told you. TriQuint Semiconductor (NASDAQ: TQNT) held its ground in the second quarter and its shares trended higher in high single digits after releasing earnings. The maker of radio frequency (RF) chips parked its revenue at $178 million, ahead of the Street estimate of $176.8 million. It also posted lesser than expected losses at 9 cents a share on an adjusted basis while analysts were looking for a loss of 11 cents.
Although revenue dipped 22% from last year due to a lull in the smartphone and tablet industry, it was not entirely unexpected. Going back in time, TriQuint had posted a decent first quarter but failed to light it up with an astounding guidance and got hammered. The company was expecting revenue way below analyst guesstimates due to lower demand from its largest customer Foxconn, or Apple (NASDAQ: AAPL) in disguise.
Foxconn/Apple constitutes almost 40% of TriQuint’s top line. As Apple focused on emptying its older iPhone 4S inventory and prepared for the next version, it placed lower orders for components. This led to a sinful guidance from TriQuint a quarter back and was also the reason behind the steep drop in revenue this time.
I have heard that before!
But this time, there’s a spring in the stride. In the words of CEO Ralph Quinsey, “Mobile devices demand was soft in the second quarter as the smartphone industry prepares for a seasonally strong second half…. We believe TriQuint is well positioned for revenue growth and improved financial performance in the second half of 2012.”
This line from Mr. CEO doesn’t come as an outrageous surprise. It seems like I am listening to the CEO of Cirrus Logic (NASDAQ: CRUS) or Skyworks Solutions, both of which are dependent on Apple for substantial revenue. Cirrus, which derives 70% of its revenue from Apple, saw its top line soar in the previous quarter but said it’s going to apply the brakes in the next one. However, even Cirrus said that it’s ready to get into turbo mode towards the back-end of the year, exactly what the TriQuint CEO is saying now.
Upping the ante
As Apple ramps up production of the next iPhone, it will demand more chips. As a result, component suppliers can expect to improve their top line and TriQuint is also likely to feature among them. The company now expects to post revenue of $195 million-$205 million in the current quarter, with the Street consensus of $202.3 million in between. It even expects to improve its gross margin to 30%-32% from 25.2% in the second quarter.
With the most exciting season of the year for mobile computing around the corner, component suppliers are getting ready to party. Skyworks Solutions kicked off the good times with a terrific display in its most recent quarter, Broadcom joined in after that, and now it’s TriQuint. With the momentum that these stocks have started gaining it won’t be a bad time to take a look at them if you still don’t have them in your portfolio.
The Foolish takeaway
And speaking of TriQuint in particular, it seems like it’s finally coming around for the better after being a less spectacular Apple derivative play as compared to the others. Moreover, the company is also building up its goodwill in the books of Apple’s prime rival, Samsung, as it is featured in the hugely successful Galaxy S III. TriQuint is gradually chipping its way up, and demands your attention. Are you listening?
TechJunk13 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Cirrus Logic, and TriQuint Semiconductor. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.