- Analog Devices gives downbeat guidance for fiscal Q2 amidst rapidly spreading Coronavirus.
- Analog Devices expects a $70 million hit in the second quarter ascribed to the health emergency.
- Analog forecast $1.35 billion in revenue in Q2 versus $1.38 billion as per the analysts' estimate.
- CEO Vincent Roche says signs of recovery are starting to show as the company enters second quarter.
Chipmaker Analog Devices said on Wednesday that its revenue in the second quarter is likely to take a hit in the wake of the recent outbreak of Coronavirus in China. Forecasting lesser revenue than the analysts’ estimate in Q2, the company said that the health emergency could cost it $70 million in the quarter.
The American multinational semiconductor company is the latest addition to the list of businesses including Apple that is anticipating a significant hit to operations and financial performance in the current quarter due to the virus crisis in China. Coronavirus has already taken 2,000 lives in China. With factories keeping closed after extended holidays for Lunar New Year in an attempt to contain the spread of the virus, supply chains and overall business processes continue to be weighed due to the outbreak.
Analog Devices Forecasts $1.35 Billion In Revenue In Q2
Analog Devices is a known supplier for a few components of Apple’s iPhones. In its guidance for the current quarter, the semiconductor manufacturer forecast $1.35 billion in revenue this quarter. According to Refinitiv, analysts are expecting the company to generate a significantly higher $1.38 billion instead. The company also said that its revenue could vary by $50 million (plus or minus) that still remains well below the experts’ forecast.
Global demand for chips has seen a slowdown in the past quarters. Fiscal 2020 was originally thought of as the year that the semiconductor manufacturers will be able to begin recovery ascribed to the upcoming 5G network that could potentially improve spending not only in smartphones but also in network upgrades. With Coronavirus posting global confirmed cases, however, it is now uncertain how strongly it could hit the market this year.
CEO Vincent Roche Says Signs Of Recovery Are Starting To Show
Nonetheless, CEO Vincent Roche adopted a hawkish tone while commenting on the guidance for the current quarter and highlighted that the demand is stabilizing and signs of recovery are already starting to show as the company steps into Q2. Roche’s comments were in line with that of competitors like Intel and Nvidia that are expecting a rebound in the chip industry in the upcoming quarters.
In premarket trading on Wednesday, Analog was reported trading 5% up at $124.5 per share that marked a just under 4% gain in 2020 so far. In 2019, the semiconductor manufacturer performed fairly upbeat with an annual gain of around 40% in the stock market.