Taiwan Semiconductor Manufacturing (TSM) Stock Down After Announcing Motech and Xintec Selloff

Taiwan Semiconductor Manufacturing (TSM) stock is falling in early-morning trading on Friday after the semiconductor company said it was selling part of its stakes in Motech Industries and Xintec.
By Amanda Albright ,

NEW YORK (TheStreet) -- Taiwan Semiconductor Manufacturing (TSM) - Get Report stock is falling 0.62% to $22.42 in early-morning trading on Friday, after the semiconductor company announced it was selling part of its stakes in Motech Industries and Xintec.

Taiwan Semiconductor will sell 5.1% of its stake in Xintec, the company said on Friday. Xintec is a commercialized three-dimensional wafer level chip scale packaging company.

"After the Xintec shares sales, TSMC will remain as the largest shareholder of Xintec with approximately 41% ownership," the company said in a statement. "The share sales will not affect the business relations between the two companies. TSMC expects to continue its close collaboration with Xintec in the business areas of CMOS image sensor, MEMS, and etc."

Taiwan Semiconductor will also sell 6% of its stake in the solar cell producer Motech Industries, or 29.16 million common shares. 

After the sale, Taiwan Semiconductor will hold 12% of Motech shares.

Separately, TheStreet Ratings team rates TAIWAN SEMICONDUCTOR MFG CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate TAIWAN SEMICONDUCTOR MFG CO (TSM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • After a year of stock price fluctuations, the net result is that TSM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TAIWAN SEMICONDUCTOR MFG CO's earnings per share declined by 19.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TAIWAN SEMICONDUCTOR MFG CO increased its bottom line by earning $1.61 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.82 versus $1.61).
  • TSM, with its decline in revenue, slightly underperformed the industry average of 10.9%. Since the same quarter one year prior, revenues fell by 16.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income has decreased by 19.8% when compared to the same quarter one year ago, dropping from $2,440.29 million to $1,957.46 million.
  • You can view the full analysis from the report here: TSM

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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