Spreadtrum shares fall after 3Q profit disappoints
NEW YORK (AP) — Shares of Spreadtrum Communications Inc., which makes chips for smartphones and other electronics, fell Friday after it reported earnings that missed expectations.
THE SPARK: Late Thursday, the Shanghai-based company reported net income of $23.2 million, or 44 cents per American depositary share, for the three months ended Sept. 30. Analysts expected 46 cents per share.
Revenue rose about 2 percent to $187.9 million.
Spreadtrum said its operating profit margin would be similar in the fourth quarter, disappointing analysts.
THE ANALYSIS: Jefferies & Co. analyst Ken Hui said the results supported his concern that as the company is expanding its portfolio, research and design spending is shooting up. Even so, he expects its market share to shrink in favor of competitors Mediatek and Leadcore. He kept a "Neutral" rating.
Nomura Securities analyst Aaron Jeng cut his "Buy" rating on Spreadtrum to "Neutral" for similar reasons.
SHARE ACTION: Spreadtrum shares fell $1.89, or 8.9 percent, to close at $19.44. The drop wiped out a month of gains.