Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of NXP Semiconductors (NASDAQ:NXPI) are up over 10% today despite only managing to meet expectations on both top and bottom lines. The company also offered forward earnings guidance for the fourth quarter and the full year that comes in below the analyst consensus. However, a partnership with China's largest bank may be the cause of today's otherwise unexpected optimism.
So what: NXP's third-quarter earnings per share of $0.56 and $1.17 billion in revenue both managed to hit analyst expectations on the nose. Its fourth-quarter expectations of $0.41 to $0.53 in EPS, and full-year EPS of $1.06 to $1.13, both fall well below the consensus expectations of $0.57 and $1.16, respectively.
NXP also announced today that the Industrial and Commercial Bank of China, or ICBC, has selected its high-security microcontroller for use in its banking cards, enabling near-field payments as well as standard swipe methods.
Now what: ICBC will roll out the cards beginning in 2013 to its 259 million customers, which represents significant growth potential for a chip platform that's already been installed in over a billion secure objects, such as passports. With a forward P/E of 8.3, NXP might be worth a second look. It's also going to be important to watch for any changes to that underwhelming guidance, which was probably calculated before the ICBC deal was finalized.
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