Friday, June 3, 2016

Japan Earthquake Routs 45% Of GoPro Supplier Ambarella’s Near Sales

Rughly 45% of Ambarella‘s (AMBA) Q2 and Q3 sales will be impacted by temporarily halted Sony (SNE) operations following a 7.0 earthquake that rattled Japan in April, Ambarella CEO Fermi Wang said Thursday during the GoPro (GPRO) supplier’s fiscal Q1 earnings conference call.
Sony restarted operations May 21 but doesn’t expect its Japanese fab to be completely operational until the end of August, Wang told analysts. Sony image sensors are used in mainstream and high-end video devices that also contain Ambarella chips.
Ambarella cut its fiscal 2017 guidance to down 5% to flat sales vs. earlier views for 15% to 20% growth. Fiscal Q2 guidance for $60 million to $66 million would be down 25% year over year at the midpoint, decelerating from a 19.5% decline in fiscal Q1.
On Friday, Canaccord analyst Matthew Ramsay reiterated a buy rating on Ambarella stock, which was up nearly 8%, near 46, in early afternoon trading on the stock market today. Earlier, shares touched a five-month high of 47.55 on Ambarella’s fiscal Q1 beat.
For fiscal Q1 ended April 30, Ambarella reported $57.2 million in sales and 34 cents earnings per share minus items. Sales edged the consensus of 11 analysts polled by Thomson Reuters for $57.01 million, and EPS topped by 6 cents.
Ambarella’s current-quarter sales view lagged expectations for $69.01 million.
While disappointing, the full-year view is indicative of Ambarella’s diversified businesses, Ramsay wrote in a research report. During fiscal Q1, wearable and automotive segments declined, but drones and home security sales were strong.
Ramsay expects a strong second half of 2016 for Ambarella, as GoPro prepares to launch its Hero 5 action camera — likely in September — two years after the Hero 4 launch.
Needham analyst N. Quinn Bolton is not bullish on the Hero 5, however, and he maintained a hold rating on Ambarella stock. Ambarella’s full-year view is dependent on a Hero 5 frenzy and a massive second-half ramp to offset Sony’s image sensor shortage, he said in a research note.
Guidance appears “aggressive given the bulk of Sony’s sensor shortage will likely fall during the peak of the holiday season,” he wrote. “As we believe the Hero 5 is not likely to support increased video resolutions relative to the Hero 4 cameras, we question how strong demand will be for the new Hero 5.”

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