Silicon Labs Shares Rise 8% on Strength in IoT
Silicon Labs shares closed 7.7% higher at $102.66 Wednesday after the company reported stronger than expected Q1 earnings. Revenue was $214.9 million vs. $188.1 million in the year-ago quarter. IoT revenue, falling 8% sequentially, was up 11% year on year…
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to $118 million; infrastructure and automotive grew 19% year on year, to $97 million. IoT revenue growth was led by microcontrollers followed by strength in 802.15.4 wireless products for home automation, security and lighting applications, said Chief Financial Officer John Hollister. The company, which announced completion of its $308 million cash Redpine Signals purchase Tuesday (see 2004280067), drew down $310 million from its bank credit facility to fund the acquisition out of an “abundance of caution given uncertainties surrounding the current environment,” he said. Redpine’s low-power Wi-Fi products and intellectual property are important technology for IoT connectivity, said CEO Tyson Tuttle, saying Wi-Fi 6 will become a key wireless technology to meet the low power performance, security and interoperability requirements needed in the IoT. China is “rebounding strongly,” said Tuttle, and Silicon Labs is encouraged by “stimulus activity” on the communications infrastructure side that will “bleed over” into IoT. On the company’s Z-Wave and Zigbee home automation business, Tuttle said operators and security installers are feeling the impact of not being able to access customers’ homes during the coronavirus shutdown. Retailers are feeling a boost from online ordering from do-it-yourselfers, but retail stores will take a “bit of a hit.” Q2 guidance is for lower revenue, $190 million-$210 million. Silicon Labs is acting to protect profitability including by “prioritizing hiring, virtually halting travel and participation in events worldwide, and judiciously evaluating discretionary projects and expenditures,” Hollister said. Tuttle reported “minimal disruption” in the supply chain during the pandemic and “strong” bookings and revenue late in the quarter.