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| Friday, September 22, 2006 |
Shares of Advanced Analogic Technologies Inc. fell on Friday to their lowest level since listing more than a year ago, after the chip maker cut its quarterly outlook, prompting at least two brokerage rating downgrades.
The stock fell 18.31 percent to $5.80 in afternoon Nasdaq trade, after touching a year low of $5.75. The stock listed in August 2005 at $10.
Late Thursday, Advanced Analogic, which makes power management chips in audio devices and mobile phones, cut its third-quarter forecast citing falling sales in Korea and Taiwan and softness in the wireless handset market.
RATING CUTS
Analyst Quinn Bolton of Needham & Co. lowered his rating on the stock to "hold" from "buy".
He said the magnitude of Advanced Analogic's pre-announced revenue and profit shortfall for the second half of 2006 raises many questions regarding the company's business with Samsung Electronics Co. Ltd. <005930.KS> and LG Electronics <066570.KS>, which are its two largest customers.
The miss also highlights the risk associated with the company's concentration at the two Korean companies, which account for 50 percent of sales, the analyst added in a research note.
Bolton also said the uncertain revenue outlook together with Advanced Analogic's lawsuits with Linear Technology will pressure its shares in the near-term.
Analyst Michael Davies of Next Generation also downgraded his view to "neutral" from "buy".
Davies noted that Samsung, which accounted for 27 percent of Advanced Analogic's revenue in the second quarter of 2006, has faced challenges in the handset market and has been slow to order newer products such as the switching regulator until after a ruling on the dispute with Linear Technology.
The companies are disputing over patent infringement.
REDUCED OUTLOOK
On Thursday, Advanced Analogic said it expects a third-quarter loss of 4 cents to 6 cents a share, on revenue of about $19 million to $20 million.
The Sunnyvale, California-based company previously said it expected to report third-quarter earnings ranging between a loss of 1 cent a share to net income of 1 cent a share, on revenue of $22 million to $24 million.
Prior to the outlook announcement, analysts on average were expecting the company to earn 3 cents a share, excluding exceptional items, on revenue of $23.4 million, according to Reuters Estimates. |
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