Wednesday, October 21, 2009

TriQuint Semiconductor (TQNT) Destroyed in After Hours Trading

Wow, things went from extremely boring to exciting all the sudden.

Sheesh - when I typed this in the morning, I did not mean it literally

TriQuint Semiconductor (TQNT) reports after the bell tonight and is the only one of the 3 I have a material stake in due to being a slave to price action. I did take profits last Thursday so it is now down to a 1% stake which is decent size going into earnings. If some strange act happens and they disappoint I won't kill the year by taking a big haircut.

Haircut it is! Down 20% in after hours - thankfully this only hits us for 0.2% overall in performance since we reduced our position size materially but this is exactly why we don't bet on earnings; and that is all it is if you roll into a stock big time going into "lemming time"

Still analyzing the report to see what went wrong; will update this entry shortly...


Analysts expected $177M in revenue, 10 cents in EPS

TQNT reported $173M in revenue, 10 cents in EPS

Nothing horrific there, slight miss in revenue - EPS on the dot. Gross margins up sequentially... good.
  • Revenue for the third quarter of 2009 was $173.0 million, up 2% sequentially and a decrease of 7% from the third quarter of 2008. All markets enjoyed sequential growth with the networks market growing 13% sequentially, partially due to clearance of excess inventory in the WLAN market.
  • Net income for the quarter was $10.5 million or $0.07 per share. Non-GAAP net income grew 37% sequentially to $15.7 million or $0.10 per share
  • Gross margin for the third quarter of 2009 was 33.8%, up from 32.3% in the second quarter of 2009. On a non-GAAP basis, gross margin was 35.0%, up from 33.2% in the prior quarter. Gross margin increased due to improved factory utilization and the elimination of inefficiencies associated with high sequential revenue growth in the second quarter.
Must be the outlook....

Analysts consensus was $188M in revenue, 13 cents in EPS

Guidance from company is $175 to $185M in revenue, 10 to 12 cents in EPS


My gosh that is a harsh reaction for a soft but flattish to slightly up guidance compared to current quarter. If this were a bank, an early cycle industrial or a retailer the stock would be up 30% in after hours for that sort of guidance.

I don't pretend to understand the lemmings; I just try to avoid them as much as possible - especially in earnings season. Definitely deserves to be down based on muted guidance, but anything over 10% seems over the top from this virtual chair. The stock will have broken support tomorrow morning, joining its two brothers in arms - in all 3 combined we only have about a 1.25% exposure so no big worries. Seems expectations were over the top ... it seems people were expecting some sort of repeat of last quarter's report which was outrageously good. This quarter was better in raw numbers, but certainly not versus expectations.

Looking at the technicals, the after hours print of $6.50 means a broken down chart... or if you want to be generous you can say this is an "off the charts" result. Ahem. The stock will be in purgatory for the next 89 days until the next earnings report, so we'll most likely be heading for the exits. Time is money.

Long TriQuint Semiconductor in fund; no personal position

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