Infineon Drops After Earnings Disappoint on Smartphone Miss

  • Smartphone business offsets strong automotive result: analyst
  • Forecast for this quarter trails estimates: Warburg Research

Infineon Technologies AG fell as much as 5.6 percent in Frankfurt trading after reporting third-quarter sales and earnings that missed analysts’ estimates because of weakness at its smartphone business.

Sales were 1.63 billion euros ($1.82 billion), and the segment result, a measure of profitability, totaled 254 million euros, according to a statement Tuesday. Analysts had forecast sales of 1.65 billion euros and a segment result of 265 million euros.

Infineon’s power-management and multimarket business, which includes the major part of the smartphone activities, missed profitability expectations “significantly,” Baader Bank AG analyst Guenther Hollfelder said in an e-mailed note. That was a surprise after stronger results from chip peers and customers Apple Inc. and Samsung Electronics Co.

The shares fell 3.8 percent to 14.14 euros at 12:22 p.m. local time.

Earnings at the automotive and industrial power business were better than expected, Hollfelder said. Infineon, which makes chips for power-management, sensors, radars and security, has relied on sales to carmakers and the industry to offset slowing growth in smartphone and tablet sales.

Infineon is trying to sell more of its products to China, Chief Executive Officer Reinhard Ploss said on a call with reporters. He said the smartphone business, while “very flat,” has a stable outlook.

Last month, Infineon agreed to buy Cree Inc.’s Wolfspeed Power unit for $850 million to expand in fast-growing markets such as electric cars, renewable energy and the internet of things. The purchase is part of Ploss’s bet on trends such as energy efficiency, connectivity and mobility, including autonomous-driving technology.

Infineon said it expects a segment result margin of 17 percent in the fourth quarter, while sales are projected to rise about 3 percent from the previous three months. The forecast is below average estimates and "disappointing,” Malte Schaumann, an analyst at Warburg Research, said in an e-mailed note.

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