Infineon Soars to 13-Year High After Earnings Beat Estimates

  • CEO calls International Rectifier integration a `success'
  • Infineon sees 2016 sales growing as much as 15 percent

Infineon Technologies AG rose to its highest in more than 13 years in Frankfurt after Germany’s largest chipmaker reported fourth-quarter earnings that beat analyst estimates on growing sales from power management and security products.

Infineon advanced as much as 14 percent to 13.20 euros, the highest intraday price since August 2002, after projecting that 2016 sales will grow as much as 15 percent. The Neubiberg-based company reported adjusted operating profit of 286 million euros ($304 million) for the three months ended September, beating the 254 million-euro estimate of analysts compiled by Bloomberg.

IFX GY EQUITY
IFX GY EQUITY

“Infineon has proven surprisingly resilient and is executing very well,” Bernd Laux, an analyst at Kepler Cheuvreux, said in an e-mailed note. Earnings per share came in at 0.29 euros, “almost twice the anticipated level,” he said. Infineon rose to 13.14 euros a share at 12:11 p.m. in Frankfurt.

Infineon will continue to look at acquisitions to grow and will move at the speed it believes is “right,” Chief Executive Officer Reinhard Ploss said on a call with analysts. The integration of Infineon’s acquisition of International Rectifier has been a “success” after the unit generated a margin of 15 percent in the fourth quarter, he said. The company proposed a dividend of 0.20 euros a share.

Auto Chips

Infineon has been building out its business focused on what’s known as power-management chips, which are used to handle the flow of power in electronics, from mobile phones to automobiles. Betting that demand for these chips will keep rising, Infineon bought International Rectifier for about $3 billion in cash in a deal completed in January.

Infineon is also betting on the auto market as carmakers including BMW AG, Tesla Motors Inc. and Daimler AG are filling luxury models with technology. Infineon has developed a sensor that can recognize drowsiness that will help the shift to autonomous driving and could be installed in cars from 2018, Ploss said. More chips in cars will improve security and “significantly” reduce traffic-related deaths in the European Union from 24,000 last year, he said.

Infineon has expressed interest in Renesas Electronics Corp., a chipmaker active in the auto market, the Wall Street Journal reported Nov. 20, citing unidentified people familiar with the situation. Two days earlier, ON Semiconductor Corp. agreed to buy Fairchild Semiconductor International Inc. for $2.4 billion, the latest in a spate of more than $90 billion of deals in the global chip industry in the past year as companies combine in the face of rising production costs. ON edged out Infineon, which had been the front-runner, people with knowledge of the matter said earlier this month.

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