Silicon-carbide chip maker’s guidance for fiscal fourth quarter and next fiscal year come in lower than Street expected as new fabrication facility begins shipping product
Wolfspeed Inc. shares declined 8% in after-hours trading Wednesday, as the silicon-carbide chip maker projected disappointing revenue figures for the fiscal fourth quarter and next year.
Executives for Wolfspeed WOLF, which was formerly known as Cree, projected a fiscal fourth-quarter adjusted loss of 17 to 25 cents a share on sales of $212 million to $232 million, while analysts on average were projecting an adjusted loss of 12 cents a share on revenue of $233 million, according to FactSet. For fiscal 2024, Wolfspeed executives…
Wolfspeed, a leading semiconductor company, announced its earnings results for the fourth quarter of 2020 on Tuesday that were largely below analysts’ expectations. The disappointment in their performance, which saw net income drop by 33.6 percent compared to the same quarter last year, caused their stock to slump by 8.8 percent.
The company, which specializes in the development of both silicon carbide and gallium nitride devices, opened a new factory at the Augsburg, Germany factory in November, aiming to increase shipments in 2021. However, the earnings report has thrown the future of the factory into doubt.
Wolfspeed’s sales in the fourth quarter of 2020 decreased by 5.9 percent year-over-year to $14.6 billion. CEO Alex Lidow cited a “global chip shortage” as being a major contributing factor. Despite this, the company’s sales and earnings per share (EPS) beat analysts’ expectations of $13.8 billion and $0.84 respectively.
However, Wolfspeed’s 2021 revenue forecast of $17.6 billion to $19.8 billion fell shy of analysts’ estimates of $18.7 billion. Following the announcement, the company’s stock price experienced its biggest decline in nearly three months.
Wolfspeed said that the demand for silicon products continues to outstrip the industry’s capacity and that this could have a negative effect on their shipments in 2021. “While we are facing challenging conditions,” Lidow said in a statement, “we believe that our technology and product portfolio, combined with our capacity expansion strategy, will enable us to continue to capture market share opportunities and deliver strong returns for our shareholders over the long term.”
Investors will no doubt be monitoring Wolfspeed’s performance in future earnings reports to see if these issues can be reversed.