MANHASSET, N.Y. Vishay Intertechnology Inc. (Malvern, Pa.) said Friday (October 15) it anticipates third quarter revenue of $580 million, down from $647 million the second quarter as a slowdown in bookings that started during the summer has shown no signs of ending.
In September, Vishay revised its earlier guidance projecting third-quarter revenue to be flat with the second quarter. At the time, Vishay's chairman and chief executive Felix Zandman said there were early indications bookings were beginning to improve.
Vishay's problems are similar to those faced by other U.S. passive suppliers, many of whom will likely see flat or slow growth over the next quarter, according to a report by American Technology Research analyst Andrew Huang.
The report said that Vishay, along with Kemet Corp. (Greenville, S.C.) would likely meet the revised guidance they issued of flat lower September quarter earnings. A third supplier, AVX Corp. (Myrtle Beach, S.C.), had projected a flat September quarter, but was also likely to see lower sales and earnings, according to the report.
The near-term outlook for passive suppliers is dim.
"We expect December quarter revenue guidance for the group will be in the range of flat to up 5 percent sequentially versus consensus expectations of 6 percent sequential growth," the report said. "Although end market demand for Q4 will likely turn out better than expectations (but less than seasonal), we believe the increase will not be enough to drive a meaningful recovery in margins and earnings. Given the ongoing (though modest) increases in capacity industry-wide, we also believe weakness will likely continue into Q1 (2005)."
Until the past few months, passive suppliers saw their earnings and revenue rebound after a tailspin that lasted several years. During the downturn, increasing competition from low-cost Far East suppliers, along with a product-mix shift due to the mobile phone market, forced U.S. suppliers to drop prices and cut profit margins to unload parts.
In addition, U.S. passive suppliers cut thousands of employees and downsized or closed some North American plants, moving production to lower-cost areas such as China.