RFICs Archive

AVGO: Delivers Strong Guidance on Upcoming Smartphone Builds (AVGO: BUY, $43 PT)

Posted May 30, 2013 By JoAnne

Avago delivered April results ahead of expectations and gave guidance above the Street. Guidance implies roughly $0.70 in EPS (non-GAAP, ex-SBC) for this quarter which is close to our prior of $0.71 and above Street at $0.68. We are reiterating our BUY and $43 price target.

  • Wireless results and outlook came in roughly where we expected as Apple builds declined, but Samsung picked up (Samsung was a 10%+ customer for first time last quarter) as did HTC (although HTC is suffering from component shortages – see prior post). China Mobile’s eventual move into 4G/LTE has apparently prompted orders for Avago components and the management noted that the interference caused by the proximity of the LTE band to the WiFi band calls for FBAR filtering. Our checks show that Apple and China Mobile remain in negotiations regarding their arrangement, but this may not stop Apple from moving forward on the product line. Also, we suspect Huawei as a customer for Avago for 4G models  and one with greater visibility toward the 4G/LTE rollout likely coming in 2H13.

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Filed in Analog, Mobility, RFICs

Comm Semi Update: Checks Show Continued Samsung Strength, Apple Inventory Clearing Ahead of New Model Launches (AVGO, SWKS, RFMD, TQNT)

Posted May 29, 2013 By JoAnne

Recent discussions with smartphone component suppliers indicate that 2Q shipments are likely to rise 5-10% Q/Q, in line with previous expectations, on new model launches. Shipments in 3Q are expected to pick up further momentum (up 15%+) as Samsung follows the S4 with more varied model launches and as low-cost iPhone builds commence.  Smartphone growth for 2013 is expected to reach 30%, led by emerging market demand for low- to mid-range models.

Our checks suggest that companies disproportionately exposed to Apple face downside risk to June quarter results, but increasing diversification protects key component suppliers such as BUY-rated AVGO, SWKS, RFMD, and TQNT. Also, ramp of Samsung models is proceeding in line with expectations and September quarter looks to combine strength in additional Samsung ramp with new Apple models.

Avago appears likely to turn in a slightly weaker-than-expected April quarter when it reports this evening, but we see guidance ahead of expectations on our checks showing strong mid-year smartphone component demand from Samsung and late-quarter iPhone initial builds. The pace of shipments should pick up further in Avago’s October quarter when ongoing Samsung builds coincide more fully with iPhone ramps. Also, while Wireline component orders remained cautious for the April quarter, the gradual return of spending signaled by Cisco and several analog providers suggest Wired and Industrial growth in July and October quarters. We are reiterating our BUY and $43 price target.

Asia Smartphone Checks & Avago Preview:

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