Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Shares of Amkor Technology Inc. Sank on Friday

By Timothy Green - Feb 12, 2016 at 12:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A slowdown in the high-end smartphone market is hurting the company's results.

What: Shares of semiconductor packaging and test services provider Amkor Technology ( AMKR 1.40% ) tumbled on Friday following the company's fourth-quarter earnings report. Amkor missed analyst estimates across the board, and weak guidance for the first quarter added fuel to the fire. At 11:50 a.m. ET, the stock was down about 19%.

So what: Amkor reported quarterly revenue of $671 million, down 21.3% year over year and about $17 million below the average analyst estimate. Revenue from advanced products fell 28% year over year, despite a slight rise in the number of advanced product packaged units. This discrepancy may be explained by a shift from mobile devices to automotive and industrial products during the fourth quarter. Fifty-four percent of Amkor's business came from communications devices during the quarter, including smart phones and tablets, down from 60% during the prior-year period.

Non-GAAP EPS came in at $0.02, down from $0.38 during the prior-year period and a penny short of analyst expectations. Amkor posted a $0.04-per-share GAAP loss, down from a $0.06-per-share gain during the fourth quarter of 2014.

Now what: Amkor pointed to sluggish market conditions in the first quarter, particularly related to the high-end smartphone market. This weakness led it to guide for revenue between $785 million to $835 million, up sequentially and year over year but shy of the average analyst estimate of $864 million. Amkor also expects to post a non-GAAP loss between $0.03 and $0.15 per share, compared to analyst expectations of a $0.01 gain.

Slowing sales of high-end smartphones, including the iPhone, are weighing on Amkor's results and guidance. A mix shift toward other categories appears to be hurting the company's profitability, despite the revenue growth expected during the first quarter. With Amkor missing estimates and providing guidance well below expectations, it's no surprise that the stock sold off on Friday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amkor Technology, Inc. Stock Quote
Amkor Technology, Inc.
AMKR
$23.11 (1.40%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.