NXP Lowers Outlook for NFC as Mobile-Payment Growth Slows

NXP Semiconductor NV (NXPI), Europe’s third-largest chipmaker, lowered its outlook for near-field communication chip shipments in 2011 as mobile-phone operators expand wireless payment systems more slowly than expected.

NXP, based in Eindhoven, Netherlands, now sees NFC deliveries at the lower end or “perhaps even slightly below” an initially predicted range of 40 million to 100 million units, Chief Executive Officer Richard Clemmer said on an analyst conference call late yesterday.

NXP shares lost as much as 17.3 percent in U.S. trading on Friday, the most since August 2010, and were down 8.5 percent at $17.79 as of 12:31 p.m. in New York.

The shortfall is caused by a combination of “formulation and agreement on the specific business models to support the ecosystem,” as well as business challenges some handset makers are experiencing, Clemmer said.

NXP provides NFC technology for Android-based smartphones from Sony Ericsson and to Google Inc. (GOOG)’s Google Wallet product.

Market research firm Gartner on July 21 predicted worldwide mobile payment users will surpass 141.1 million in 2011, a 38.2 percent increase from 2010. “The mobile payment market is growing slower than expected,” Gartner analysts said.

“Carriers continue to try to figure out an economic proposition,” Clemmer said in a conference call today. The company still believes the ramp of mobile transactions will occur, albeit with a delay of one to two quarters, he said. For 2012, NXP expects a doubling of the number of units.

‘Return to Reality’

”After a first period of ‘hype’ we are now entering one of a ‘return to reality,’ which in no way challenges the market’s longer-term outlook,” analysts at Natixis said in a note to clients.

NXP reported second-quarter net income yesterday of $84 million compared with a year-earlier loss of $362 million as sales rose 0.2 percent to $1.12 billion.

Product revenue may fall as much as 5 percent in the third quarter versus the second quarter, the company said, and earnings per share will be in the range of 47 cents to 56 cents.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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