The United States in April banned American firms from selling parts and software to Chinese telecom equipment maker ZTE Corp for seven years for violating the sanctions against Iran.
Apple supplier Skyworks Solutions Inc forecast current-quarter revenue below estimates on Thursday as global smartphone demand slows and U.S. restrictions on customer ZTE weigh, overshadowing better-than-expected second-quarter results. Skyworks, whose radio frequency chips are used in Apple Inc’s iPhone, joins a long list of global suppliers to warn of smartphone weakness that had fueled fears of waning demand for iPhones. However, Apple reported resilient iPhone sales on Tuesday. Piper Jaffray analyst Harsh Kumar said the company’s forecast miss is mostly because of the action against ZTE. The hit on revenue from ZTE of about $25 million to $30 million was included in the guidance, Chief Executive Officer Liam Griffin said on a conference call with analysts. The United States in April banned American firms from selling parts and software to Chinese telecom equipment maker ZTE Corp for seven years for violating the sanctions against Iran.
Skyworks said it expects third-quarter revenue in the range of $875 million to $900 million, while analysts were expecting $931.8 million. Analyst Kumar said the guidance was “really not that bad” as investors expected much worse because of soft trends at Apple. CEO Griffin said he expected meaningful sequential growth into the fourth quarter and into December following a traditional seasonal pattern for mobile and smartphones. Strong demand for chips used in network gear, connected devices and automobiles helped Skyworks top estimates for second-quarter profit and revenue. The company’s net income rose to $276 million, or $1.50 per share, in the three months ended March 30 from $224.9 million, or $1.20 per share, a year earlier.
Excluding certain items, Skyworks earned $1.64 per share, above estimates of $1.60. Revenue rose to $913.4 million from $851.7 million, beating estimate of $910.7 million, according to Thomson Reuters I/B/E/S. Shares of the Woburn, Massachusetts-based company were marginally lower at $91.83 after the bell.