Dialog shares boosted as deal with Apple fails to drag on predictions
Shares in Dialog Semiconductor rose 2.2 per cent today despite fourth quarter results which showed a drop in revenues and predicted of a further fall in 2019.
The Anglo-German chipmaker made a stock market bounce after posting better-than-expected fourth quarter results in the midst of an ongoing $600m (£460m) technology transfer deal with its biggest customer Apple.
Read more: Apple supplier Dialog warns sales will hit lower end of forecast
Dialog’s results show fourth quarter revenue was $431m, down seven per cent from the same period a year earlier. The firm’s full-year results for 2018 revenue was up seven per cent from 2017, however, reaching $1.4bn.
The German-listed company’s operating profit for quarter four was $77m, contributing to a full-year operating profit of £200m, up from 2017’s full year figure of $187m.
Cash flow in the fourth quarter was down to $97m from $130m in quarter four of 2017.
Dialog is in the middle of a deal, announced in October last year, to “license certain of its power management technologies, transfer certain of its assets and over 300 employees to Apple to support chip research and development”, according to its most recent report.
Looking to 2019, Dialog said it anticipated full-year revenue for 2019 to decline by “single digit percentage points”. It said it expects revenue from its power management chip business with Apple to decline over the next few years, but anticipated “the combined revenue of our remaining businesses to show strong year-on-year growth”.
Analyst Achal Sultania of Credit Suisse said the markets like the transition away from Apple “as it is going on smoother than expected.”
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He added: “They have a very strong balance sheet, and then Apple is going to give them another $600m of cash, so roughly half of the market capitalisation is in net cash. That means they have got a lot of options around M&A and share buybacks going forward.”
Dialog chief executive Dr Jalal Bagherli said 2018 was an i“mportant year” for the firm.
“Our agreement with Apple will enable us to generate immediate value for our shareholders while strengthening our long-term partnership,” he added.