ADI stock Surges
Analog Devices, Inc. (NASDAQ:ADI) stock received an unexpected boost of $1.87 yesterday following when the company announced better than expected earnings for the Q2 2019 period. IDI posted earnings per share of $1.36 and revenue of $1.53 billion topping Wall Street’s consensus estimate of $1.31 earnings per share and revenue of $1.5 billion. As of this writing the shares had corrected to $101.44 from yesterday’s peak of $101.75.
The famed semiconductor manufacturer generated a net income of $367 million and adjusted earnings per share of $0.98 against last year’s figure of $400.3 million and adjusted earnings per share of $1.06. The biggest contributor of ADI’s revenue is its Industrial activities that generated a whopping $763 million during the Q2 period. The figure represents a 6% YOY decline against the industry’s slump of 11.1%.
Earnings from communications and related end markets surged 3% YOY to $359.6 million. The company attributes the rise to the robust deployment of 5G and 4G networks. ADI’s automotive dealings generated revenue that accounted for 16% of its total earnings at $249.8 million. There was no significant YOY movement. Lastly, earnings from the consumer end market surged nearly 32% YOY to $153.7 million accounting to 10% of the total revenue.
Lowered Q3 2019 Outlook
Despite the evident momentum, the company lowered its Q3 2019 outlook in response to the U.S. government restrictions on an unnamed telecommunication company. Although ADI did not disclose the telecommunication giant in question, all evidence point to the Chinese-Huawei Technologies.
Recently, President Trump through an executive order restricted all U.S. companies from transacting with Huawei citing national security reasons. The U.S. Department of Commerce moved in swiftly to add Huawei and its Affiliates to its infamous Entity List. ADI admitted that government restriction will negatively impact its earnings in the short-term. Strong growth in demand for its communication chips is likely to boost revenue in the future and cement the company’s position in the industry.
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