Xilinx Inc <XLNX.O> on Wednesday forecast first-quarter revenue below estimates and refrained from providing an annual outlook, citing the uncertainty caused by the coronavirus outbreak. The pandemic has ripped through the semiconductor industry, with lockdown orders interrupting operations and supply chains, even though many plants were eventually allowed to remain open. Xilinx shares, which closed 5% higher on Wednesday, shed most of those gains in extended trading.
"I don't think anybody has a roadmap for where we are today," Chief Executive Officer Victor Peng told Reuters in an interview. He noted that despite predicting declining revenue for the current quarter, the company had a "stronger than historical" backlog of orders.
"We're trying to be as transparent as we can be and be neither overly pessimistic nor overly optimistic. We just felt like to go from usually providing full-year guidance to just zero (guidance) may have been interpreted as quite bad, so we didn't want to do that," Peng said. Xilinx plans to be more conservative with buyback activity as it focuses on preserving capital and improving its liquidity position, Peng said on a call with analysts. The company started seeing coronavirus-related demand weakness halfway through the quarter, with its automotive business impacted the most as car sales declined significantly in China and globally, Peng said. The San Jose, California-based firm, which also makes chips used in 5G telecommunications base stations, has been prevented by U.S. authorities from shipping some products to Huawei Technologies Co Ltd [HWT.UL].
Peng said other 5G equipment makers were expected to resume rolling out networks in China later this year and that networks in North America and Europe would still come online over the next few years despite the pandemic.
"Near term, it's a little challenged, but if you step back the only thing that's been deployed is the first wave," Peng said. "Even if there are delays, it's just delays, and not demand destruction." Xilinx said it expects first-quarter revenue between $660 million and $720 million, below analysts' average estimate of $738.8 million, according to IBES data from Refinitiv. The company posted revenue of $849.6 million in the same period last year.
(Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Devika Syamnath and Sam Holmes)
