Diodes Incorporated (DIOD) Narrows Q4 Revenue Guidance - Analyst Blog

Diodes Incorporated (DIOD) has provided an update on its fourth-quarter of fiscal 2014 guidance. The company now expects revenues to come within the $220 million and $228 million range, a narrower range than the previous expectation of $217 million to $231 million set forth during the third-quarter conference call. The mid-point ($224 million) remains lower than the current Zacks Consensus Estimate of $225 million.

Diodes however reiterated its gross margin and operating expenses guidance for the fourth quarter and expects these to be approximately 31.6% (-/+2%) and 22.2% of total revenue (-/+1%), respectively. The income tax rate is expected to be 25% (-/+3%). Moreover, the company expects its share count to be approximately 49 million.

The current revenue guidance reflects a 2-6% sequential decrease. In the third quarter of 2014, Diodes reported revenues of $233.8 million, up 4.1% year over year and 4.7% on a sequential basis. The increase was primarily due to better-than-expected growth across its consumer, communications and computing end markets.

The company reported adjusted earnings of 43 cents per share in the last reported quarter, which not only beat the Zacks Consensus Estimate by a penny but also increased 30.3% on a year-over-year basis.

Estimate Revision

Over the past 60 days, the Zacks Consensus Estimate for 2014 decreased 3.4% to $1.43 per share. Notably, three out of four estimates were revised downwards for 2014 over the same time period.

Our Take

The BCD Semiconductor acquisition is benefiting Diodes by expanding its footprint in the broader analog market and extending its product offerings. We believe that the company's product launches and product refreshes will boost revenues, going forward.

However, competition from the likes of Fairchild Semiconductor International Inc. (FCS) and ON Semiconductor Corp. (ONNN) remains a concern.

Currently, Diodes has a Zacks Rank #4 (Sell).

Not all technology stocks have been performing as poorly as Diodes. A better-ranked technology stock is Micron Technology (MU) which sports a Zacks Rank #1 (Strong Buy).