What: Shares of radio frequency solutions leader Qorvo (NASDAQ: QRVO) fell as much as 12% on Wednesday following the company's earnings release for its fiscal 2017 first quarter. At the time of this writing, shares are down about 11.4%.
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Image source: Qorvo.
So what: On the surface, Qorvo's first-quarter results were solid. Its revenue and EPS both exceeded analyst expectations. Revenue and EPS were $699 million and $1.08, respectively, which compares to consensus analyst estimates for revenue and EPS of $650 million and $1.06. Further, Qorvo's guidance was higher than expected. For Q2, management said it expected revenue in the range of $820 to $850 million, and EPS between $1.35 and $1.45. Analysts were expecting second-quarter revenue of $713 million and EPS of $1.25.
Investors may be disappointed in the company's gross profit margin, which was 39.6%. The company's gross margin decreased 220 basis points sequentially "primarily due to a mix shift to lower margin products," the company said in its first-quarter press release.
Now what: While the company's guidance for the current quarter was higher than expected, some analysts may be unimpressed, as the higher-than-expected guidance could simply be due to an iPhone launch scheduled to come a week earlier than usual this year, according to Wells Fargo analyst Maynard Um (via Barron's). As an iPhone supplier, Qorvo's results are tied closely to Apple's orders for technology from the company.
Going forward, Qorvo CEO Bob Bruggeworth said the company continues to see "strong demand in support of this year's most popular devices."
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