NXP Semiconductors, the prominent Dutch chipmaker, experienced a significant drop in its shares on Tuesday morning following the release of a cautious third-quarter outlook. Investors reacted sharply as the firm indicated that both profit and revenue for the past quarter had decreased in comparison to the previous year, raising concerns about market conditions.
Adjusted earnings for the ongoing quarter are projected to fall between $3.21 and $3.63 per share, with the midpoint of $3.42 sitting below the consensus estimate from Capital IQ, which was $3.60. Revenue expectations are also uncertain, ranging from $3.15 billion to $3.35 billion, while Wall Street anticipates $3.35 billion. In premarket trading, shares of NXP witnessed a notable decline of 9.1%.
The company's earnings report for the second quarter, coupled with its forward guidance, indicates that NXP has successfully navigated through recent cyclical downturns, with CEO Kurt Sievers expressing optimism about potential sequential growth moving forward. "We continue to manage what is in our control enabling NXP to drive resilient profitability and earnings in a challenging demand environment," Sievers remarked in a detailed statement. For the quarter ending June 30th, NXP recorded adjusted earnings per share (EPS) of $3.20, aligning with market expectations but showing a decrease from $3.43 reported in the same quarter last year.
Earlier this year, in April, NXP had projected second-quarter EPS to fall in the range of $3 to $3.41. As for revenue, the firm reported a 5% decline, landing at $3.13 billion, which slightly exceeded analysts' expectations of $3.12 billion. The automotive segment was particularly impacted, with revenues dipping by 7% to $1.73 billion.
Conversely, NXP saw growth in other sectors, including a 6.6% increase in the industrial and Internet of Things segment, which rose to $616 million from $578 million in the prior year. A significant highlight was the mobile revenue, which surged by 21% to reach $345 million, although the communications infrastructure segment witnessed a more concerning 23% decline, totaling $438 million. In terms of margins, NXP reported a slight improvement with an adjusted gross margin of 58.6%, up from 58.4% the previous year.
Operating expenses also saw a reduction, falling to $892 million from $944 million compared to the same quarter last year. As NXP Semiconductors navigates these complexities, market watchers will be keenly observing its ability to adapt to shifting demand dynamics and sustain profitability amidst a challenging environment.
As of the latest trading session, the price per share stood at $259.50, reflecting a change of -24.31 and a percentage drop of -8.57 in value. $NXPI.