Skip to main content

Wireless chip company Qorvo (QRVO) - Get Qorvo, Inc. Report strong guidance for the coming quarter could provide a window into the launch of Apple (AAPL) - Get Apple Inc. Report iPhone 7 in September. 

Qorvo said after the close Tuesday that it expects to generate $820 million to $850 million in sales during the fiscal second quarter, which ends in September, while Wall Street had expected $714 million. While Qorvo expects sales to pick up, it also said that its product mix could squeeze margins. Shares dropped $7.21, or 11.7%, to $54.24 on Wednesday.

"In the September quarter, we continue to see strong demand and support of this year's most popular devices and we're rapidly expanding our capabilities to develop new, highly integrated solutions for large customer opportunities launching in 2017 and 2018," CEO Robert Bruggeworth told investors.

Apple is the company's largest customer.

"Like Cirrus Logic's (CRUS) - Get Cirrus Logic, Inc. Report earnings call last week, we can get a positive readthrough about the iPhone 7, from Qorvo, too," said Jim Cramer, TheStreet's founder and manager of the  Action Alerts PLUS portfolio, which owns Apple. "Of course, no supplier is allowed to jump up and down and say 'wow is Apple ordering,' but it is pretty clear that their biggest customer is putting gin a lot of orders and we know that Apple's their biggest."

TheStreet Recommends

Likewise, DA Davidson analyst Thomas Diffely suggested that Apple will be "the main driver of the more than $100 million quarterly up-side," in a report.

Quorvo's bullish outlook could hint at the timing of the iPhone 7 launch, Maynard UM of Wells Fargo suggested in a note.

"While Apple's contribution for the September quarter upside is hard to tell, Qorvo's guide could potentially support a one week earlier iPhone launch than prior years and the extra week added for the December quarter," he wrote.

The first fiscal quarter, which includes the holidays and ends in December, is Apple's biggest. By adding a week to the first quarter, Apple would be able to make up for the reduced sales during the period by moving the launch up a quarter.

Wall Street estimates may not reflect an upsized first-fiscal quarter with 14 weeks instead of 13, Um suggested.

Looking further ahead, UBS analyst Steven Milunovich boosted his forecast for fiscal year 2017 iPhone sales from 207 million to 222 million, marking a 5% increase from fiscal year 2016. Bang-up sales in fiscal year 2015 "stole" from fiscal year 2016, he suggested, but upgrades should provide a lift in 2017 and 2018. The analyst expects iPhone 7 demand "in between that of the stellar 6 and disappointing 6s," he wrote.