ON Semiconductor
posted third-quarter earnings and revenue better than Wall Street estimates, but provided fourth-quarter guidance below expectations.
The chip maker cited a deteriorating demand from its automotive and industrials customers, pushing its stock price lower.
ON Semiconductor
(ticker: ON) reported third-quarter earnings of $1.39 a share on revenue of $2.18 billion. Analysts surveyed by FactSet were expecting the company to report third-quarter earnings of $1.34 a share on revenue of $2.15 billion.
In the same period last year, ON Semi posted earnings of $1.45 a share on revenue of $2.19 billion.
“Our disciplined approach and execution resulted in another solid quarter, demonstrating the resilience in our business amid market softness,” Chief Executive Hassane El-Khoury said in the earnings release.
The company said it expects fourth-quarter earnings of between $1.13 share and $1.27 a share, which is below the FactSet consensus of $1.36. Revenue estimates of between $1.95 billion and $2.05 billion also were below analyst estimates of $2.18 billion.
Shares of ON Semi were down 18.1% in Monday trading. The outlook also weighed on rivals NXP Semiconductor (NXPI) and Analog Devices (ADI), whose shares were down 5.6% and 1.9%, respectively, Monday morning.
On the earnings conference call with investors, ON executives said they were seeing “pockets of softness” with some large customers in Europe and a rising risk of a slowdown in auto demand due to higher interest rates. They also saw broad-based weakness in the industrials sector and expected the uncertain macro environment to last heading into next year.
ON Semi’s guidance is a warning to auto investors that EV sales are slowing down, not just in the U.S., but around the world.
The weak guidance comes after
Ford Motor
(F) and
General Motors
(GM) both recently deferred tens of billions of investments in EV production citing the economy and moderating EV demand.
Tesla
(TSLA) stock dropped 9.3% after the company reported third-quarter numbers with CEO Elon Musk citing the detrimental impact high interest rates were having on demand.
The transition to electric vehicles has generally been a bullish development for chip makers like ON Semi.
“Every new EV being built is going to have almost 14x more content just on the drivetrain,“ El-Khoury said at a September investor conference.
Shares of ON Semi were recently recommended in Barron’s Trader column, which noted that the stock was cheap heading into earnings.
—Al Root contributed reporting to this story.
Write to Angela Palumbo at [email protected]
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