Wireless chip manufacturer TriQuint Semiconductors
TriQuint did top expectations in Q1, even though the top and bottom lines both slid. The company also predicted losses for Q2, driven by a $12 million to $14 million restructuring charge as it transitions toward the production of higher-value products.
TriQuint's fortunes seem to be closely intertwined with that of smartphone maker Apple
To make matters worse, TriQuint also supplies chips to Nokia
Incidentally, industry peer Texas Instruments
The Foolish bottom line
TriQuint seems to be too dependent on just a few customers in its mobile-devices segment, making its performance potentially volatile. One solution might be to concentrate more on its network infrastructure segment, where revenue rose 10% on a sequential basis. This segment is already performing pretty well, as wireless base station revenue jumped 20% sequentially because of the expansion of LTE networks and wireless traffic from data-hungry tablets and smartphones. If TriQuint manages to grow this segment further, it particularly stands to gain from 3G and 4G network buildouts taking place in the U.S., the European Union, and China.
If management is to be believed, TriQuint should recover toward the end of this year. While I'm not particularly happy about the revenue volatility created by its significant customer concentration, I'll still keep an eye on TriQuint. You can do the same by adding it to your free Watchlist.
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Fool contributor Keki Fatakia holds no shares in any of the companies mentioned in this article. The Motley Fool owns shares of TriQuint Semiconductor and Apple. Motley Fool newsletter services have recommended buying shares of Nokia and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.