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How NXP Semiconductors Shares Gained 11% Last Month

What happened

Shares of NXP Semiconductors (NASDAQ: NXPI) gained 11.2% in November 2018, according to data from S&P Global Market Intelligence. The maker of embedded chips and automotive computing solutions started the month with a strong earnings report and never looked back.

So what

NXP's third-quarter revenues grew 2.4% year over year to $2.45 billion. Unadjusted earnings spiked to $5.60 per share, up from $1.69 per share in the year-ago period, but that result included a $2 billion deal termination fee from Qualcomm (NASDAQ: QCOM) that won't be repeated. Without that unique item and the associated tax effects, adjusted earnings would have landed near $2.25 per share.

The analyst consensus was calling for earnings near $1.90 per share on top-line sales in the neighborhood of $2.42 billion. NXP surged right past the earnings target with or without the Qualcomm payment, and the revenue result provided a milder surprise. The stock closed 12.1% higher that day.

Now what

NXP is showing why Qualcomm wanted to own the company in the first place. The company has a bright future thanks to its market-leading position in automotive computing, and Qualcomm's $1.7 billion termination fee -- after taxes -- can only help NXP accelerate its research and share buybacks.

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Anders Bylund owns shares of NXP Semiconductors. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends NXP Semiconductors. The Motley Fool has a disclosure policy.