NXP Semiconductors NV plunged the most in four years after forecasting an unexpected decline in fourth-quarter revenue as customers pulled back on orders amid a slowing global economy and higher inventories of unsold chips.
The shares fell as much as 19 percent in early New York trading. NXP anticipates a percentage drop in sales in the “low to upper-teens,” the Eindhoven, Netherlands-based company said Thursday. Analysts had been predicting an increase.
“Our guidance for the fourth quarter reflects a much more cautious view of near-term sales,” NXP Chief Executive Officer Rick Clemmer said in a statement. The CEO doesn’t see chip demand returning yet, though he does expect it to recover in coming quarters, he said during a call with analysts on Thursday.
An economic slowdown in China has forced other chip companies to warn of weaker-than-anticipated demand. STMicroelectronics NV said on Thursday that it will scale back its chip manufacturing. NXP is seeing the biggest negative impact in chips designed for security and power management, the company said.
“Nobody saw this coming,” Anand Srinivasan, an analyst for Bloomberg Intelligence, said by phone. “The big thing is the magnitude, and that is so surprising.”
Third-quarter revenue was little changed at $1.52 billion, NXP said. That missed the average analyst estimate of $1.55 billion, according to data compiled by Bloomberg.
Profit, excluding some items, was $1.57 a share, compared with analysts’ average projection for $1.50 and $1.35 a year earlier. Profitability improved on cost controls, NXP said.
The Dutch chipmaker is awaiting regulatory approval on its takeover of Freescale Semiconductor Ltd., an $11.8 billion deal that would pit the combined company against Texas Instruments Inc. in making chips that turn everyday items into connected devices.
The shares traded 14 percent lower at $78.13 a share. Today’s decline wiped out NXP’s gains for the year, leaving the company with a market value of $19 billion.