SAN FRANCISCO—Analog chip vendor Avago Technologies Ltd. supplies only a duplexer to the CDMA version of Apple Inc.'s iPhone 4, less than Avago supplies to other leading CDMA OEMs and a possible drag on the company's revenue going forward, according to an analyst.
With the CDMA version of the popular handset likely to impact sales of CMDA smartphones from Avago customers including Samsung Electronics Co. Ltd., Research in Motion Ltd. and HTC Corp., Avago could face a slight "headwind" on revenue, according to Ian Ing, an analyst with Gleacher & Co.
Avago (Singapore) on Wednesday reported sales for the quarter ended Jan. 30 of $550 million, down 4 percent from the previous quarter and up 21 percent compared with the year-ago quarter. The company reported a net income for the quarter of $129 million, down from $131 million in the previous quarter and up from $116 million in the year-ago quarter.
Avago's sales for the quarter exceeded consensus analysts' expectations, which called for the company to report revenue for the quarter of about $546 million, according to Yahoo Finance.
Ing wrote in a report circulated Thursday that Gleacher believes Avago is on track to dominate high-speed SerDes ASICs, which account for 9 to 10 percent of the company's sales. Avago's ASIC SerDes competitors like IBM Microelectronics and LSI Corp. appear to be underinvested in their merchant ASIC businesses, Ing wrote. ASICs continue to be used in higher-end networking and customized resource applications that FPGAs from Xilinx Inc. and Altera Corp. cannot optimally address, according to Ing.
Avago said it expects sales for the current quarter to be between $544.5 million and $561 million, down 1 percent to up 2 percent sequentially. Ing called the revenue guidance "slightly soft," noting "some distributor/industrial inventory correction remains."
Ing said Gleacher analysts believe that Avago's target rate of 10 to 12 percent sales growth in 2011 is achievable and that consensus analysts' expectations for Avago may be too conservative.
Gleacher maintains a "buy" rating on Avago's stock and a price target of $38.50. Avago traded at $32.93 in morning trading Thursday, up 5 percent from Wednesday's close.