Xilinx shares were plummeting after the company issued poor revenue guidance for the current quarter, as 5G demand is looking softer than previously expected. But management has a plan to provide a floor to earnings downside, CEO Victor Peng told TheStreet’s Tiernan Ray.
The stock was falling 9.96% to $88.79 a share Wednesday.Revenue for the reported quarter missed expectations, while earnings per share beat expectations.
“As expected, our fiscal third quarter was a challenging quarter and our revenue came in near the midpoint of our guidance,” the company said on its earnings report. “We expect some of these headwinds in our wired and wireless business to be persistent, resulting in revenue growth lower than our prior expectations.”
The company guided for revenue for the current quarter of between $750 million and $780 million.
TheStreet’s Tech Editor Nelson Wang broke down what is happening in the supply chain and how that’s impacting Xilinx:
“The key thing was the guidance that they missed and a lot of it they said was owing to less than expected demand for 5G equipment from its customers who use Xilinx’s chips to facilitate 5G, so there was a big shortfall there.”
Here’s what Ray took away from speaking with Peng:
“They have cut 7% of the global workforce. They’re cutting down on SG&A, trying to focus on maintaining the R&D [research and development] budget because they have all kinds of new chip projects. They’ve got two factors that they’re dealing with. One is true is much more uncertain, according to the CEO Victor Peng. Now, he’s saying there doesn’t some to be a lot of energy behind a Phase Two agreement on trade and so that’s a bit discouraging. The second thing is 5G — we’ve been saying at TheStreet that 5G is going to take longer to roll out in networks begin built around the world. From what he has heard from carriers, they are taking a step back now and they’re saying ‘Are we going to be as profitable on 5G as we would have hoped?’”
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