Silicon Laboratories Inc. (NASDAQ: SLAB) is not exactly the largest household name when it comes to the world of chips design, as opposed to Intel Corporation (NASDAQ: INTC). But what these two companies have in common are earnings warnings and a rather harsh run for their stocks. Silicon Labs just set a new 52-week low today and Intel is trading right at the bottom, too.
Shares of Silicon Labs are lower today after the chip designer came clean and lowered its third-quarter sales forecast after demand has lightened up in several of its technology segments. The problem is that the July guidance was lower and its August bookings weakened even further.
The new guidance from Silicon Labs for revenues is between $118 to $122 million versus its prior $136 to $141 million range. That translates to a drop of about 13% off of its higher and lower forecast figure. The larger disappointment is that earnings for Silicon Laboratories are now expected to be $0.50 to $0.53 EPS. Thomson Reuters had estimates of $0.72 EPS and roughly $139.5 million in revenues.
Using Intel is not of course the most logical comparison, since SLAB is about 60 times smaller. Nor are the two companies meant to be tied in any fashion other then having chip-related businesses that have seen a drop in demand. Silicon Labs makes the design and development of analog-intensive and mixed-signal integrated circuits for all sorts of networking and communications systems. But the problems in the tech sector have been shared by these two picks.
With a prior 52-week range of $37.83 to $53.17, Silicon Labs hit a new 52-week low of $34.18 this morning before shares recovered to back above $35.00 today.
The problems seem to be sector wide. The Semiconductor HOLDRs (NYSE: SMH) ETF is down 0.4% at $25.21 today and the 52-week range is $23.54 to $30.67. Intel actually rose on the Friday morning that it issued its earnings warning, but that did not keep it from later putting in new 52-week lows.
Last night, Altera Corporation (NASDAQ: ALTR), which designs and manufactures programmable logic devices and integrated circuit devices, actually raised its guidance slightly. Its shares are up 2.35% at $27.23 versus a 52-week range of $19.23 to $29.05.
What appears to be happening is an overall downtrend continuation in general. The good news is that there are enough aspects of the technology market that some stocks are still winning and still managing to show upside surprise.
As of this writing, Jon Ogg did not own a position in any of the stocks named here.
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