Constraints from the “ongoing shortage” in semiconductors remain “the biggest limiting factor” in revenue growth for contract manufacturer Flex, said CEO Revathi Advaithi on an earnings call Wednesday for fiscal Q1 ended July 1. “We currently expect this trend to continue,” she said. Q1 revenue grew 16% year over year to $7.35 billion, “driven by continued strong demand and our ability to deliver in spite of ongoing component constraints,” she said. “Not surprisingly, we are seeing indications of slowing in some consumer-related markets. However, we have been anticipating this change, and it is within our current expectations for the full year.” Flex in recent years has “purposely deemphasized the most volatile and shorter-cycle businesses,” said Advaithi. Its consumer device revenue went from about 17% of its mix in 2018 “to now only 10% in fiscal 2022,” she said. “The macro environment remains highly uncertain, and none of this is to say we're immune to it, but we have effectively navigated the challenges over the last couple of years, and we have continued to adapt and improve.”
Qualcomm now expects global handset shipments in calendar 2022 to decline by “a mid-single-digit percentage” year over year, including 650 million to 700 million 5G handsets, said Chief Financial Officer Akash Palkhiwala on an earnings call Wednesday for fiscal Q3 ended June 26. Previous Qualcomm 5G smartphone forecasts pegged shipments to exceed 750 million handsets for calendar 2022.
LG Display swung to an operating loss of 488 billion South Korean won ($371.9 million) in Q2 from a year-earlier profit of 701 billion won ($531.1 million) on a 19.5% year-over-year revenue decline to 5.61 trillion won ($4.27 billion), reported the panel-maker Wednesday.
Three prominent cardiologists and StopAfib.org, an atrial fibrillation patient advocacy organization, came to Apple’s defense Wednesday, urging the International Trade Commission in docket 337-TA-1266 not to ban imports of the Apple Watch, Series 4 through 6, for infringing two AliveCor electrocardiogram patents. ITC Administrative Law Judge Cameron Elliot, in a June 27 initial determination, found Apple guilty of Tariff Act Section 337 violations (see 2207140030). The “irregular pulse notification” alerts on the Apple Watch “can effectively identify people with atrial fibrillation who were not previously aware of this condition,” wrote Marco Perez, Stanford University associate professor of cardiovascular medicine and a board-certified cardiac electrophysiologist. As a clinician who manages patients with atrial fibrillation daily, Perez can attest that “many of these patients either did not have symptoms and were therefore unaware of a problem, or did have symptoms such as palpitations, but were previously dismissed or just could not be diagnosed by other means,” he said. Thanks to the cardiac alerts they received on the Apple Watch, said Perez, “many of these patients now have received treatment earlier than they would have otherwise, which has lowered their risk of stroke and has ameliorated their symptoms.” Hugh Calkins, cardiology professor at Johns Hopkins University, and Richard Milani, vice chairman of the Cardiology Department at Ochsner Health System in New Orleans, gave similar Apple Watch endorsements, as did StopAfib.org CEO Mellanie True Hills. Removing the Apple Watch and its cardiac alerts as an “option” could have “devastating effects on the atrial fibrillation patient community and their family members,” said Hills. But the Medical Device Manufacturers Association was alone among those commenting to urge the ITC to enforce its proposed import ban on the Apple Watch. In Apple’s “push to extend the reach of its consumer products” into the health and wellness space, it has “disregarded the patent rights of innovators,” said the group. The recommended import ban “is in the public interest given the need to protect the patent rights of medical device innovators from the threat of companies such as Apple who can afford to engage in ‘efficient infringement’ as a business strategy,” it said. Apple didn’t comment.
Despite the “changing market” for PCs, Microsoft continues to see more PCs shipped than pre-COVID-19 pandemic, and it’s “taking share,” said CEO Satya Nadella on an earnings call Tuesday for fiscal Q4 ended June 30. “We are seeing higher monthly usage of Windows 11 applications with increased time spent across creative work, collaboration, gaming, media and writing code as people rely on the PC for its unique productivity capabilities, rich interactive experiences and to stay connected,” he said. The “extended production shutdowns” in China due to COVID-19 that continued through May, plus the “deteriorating” PC market in June, “contributed to a negative Windows OEM revenue impact of more than $300 million,” said Chief Financial Officer Amy Hood. Revenue in Microsoft’s personal computing segment was up 2% year over year to $14.4 billion, she said: “Segment results were below our guidance range.” Microsoft sees its Windows OEM revenue declining by high-single digits in its fiscal Q1 ending Sept. 30, assuming that “the trends we saw in June continue through Q1,” said Hood.
Aaron’s, reporting quarterly results for the first time since closing its $230 million BrandsMart buy April 1 (see 2204010026), said Monday the BrandsMart business contributed $181.4 million in Q2 revenue. BrandsMart's sales were about 7% lower than in the 2021 quarter, when BrandsMart was still privately held, said Chief Financial Officer Kelly Wall on a quarterly earnings call Tuesday. "This expected decline was due primarily to the normalization of customer demand following a strong second quarter in 2021, which we believe benefited from last year's government stimulus," said Wall. Aaron's isn't providing same-store sales comparisons for BrandsMart because all BrandsMart stores "have been open for more than 13 months," he said. Aaron’s will continue to invest in BrandsMart, “which we believe is the low price leader and retailer of choice for appliances and consumer electronics in the markets we serve,” said CEO Douglas Lindsay. “This new segment performed well in the second quarter, exceeding our internal expectations and increasing our optimism about the additional value creation opportunities available through this acquisition.”
Corning’s panel maker customers “accelerated” their capacity utilization reductions in Q2, with the “sharpest reduction” taking place in June, when utilization levels plunged "to their lowest levels since the first quarter of 2009 when we were at the height of the financial crisis," said Corning CEO Wendell Weeks on a quarterly earnings call Tuesday. That resulted in a 6% year-over-year Q2 sales decline in Corning’s display-glass business to $878 million, while net profit in the sector was $228 million, down 8% from the same 2021 quarter.
NXP Semiconductors is “not immune” to “the clearly weakening macro environment,” said CEO Kurt Sievers on a Q2 earnings call Tuesday. “When we look at demand signals, we have a high level of confidence in the intermediate term outlook,” especially in the automotive and industrial markets that account for the majority of NXP’s total revenue, he said. “While there is well-documented weakness in the low-end Android handset markets, it is important to note that our mobile business is more biased towards the premium-tier members, and in aggregate, our mobile business accounts for only about 12% of our total revenue.” NXP is "not neglecting the cross currents in the macro, which have also started to be visible in our orders, especially in the mobile market," said the CEO. "Mobile is for us relatively small, so it doesn't really impact the whole company very much. But the principle we are applying is to be hyper-disciplined and hyper-paranoid to not grow any inventory down the chain."
The Section 301 tariffs on Chinese imports are causing “a tremendous amount of pain and anguish” for consumer tech companies, and “we prefer to see the tariffs go away,” Ed Brzytwa, CTA vice president-international trade, told an International Trade Commission virtual hearing Friday. The $32 billion that CTA estimates the consumer tech industry paid Customs and Border Protection in Chinese tariffs from their 2018 inception through the end of 2021 “is nothing to sniff at,” he said.
Though American Express is “wary of the uncertainties” in the current economic environment and the impact it's having on the business, Q2 revenue grew 31% year over year, reaching a record $13.4 billion, said CEO Stephen Squeri on a quarterly earnings call Friday. The “historically low” U.S. unemployment rate “is a positive factor, as it's helping to drive our strong credit metrics, and we continue to see no significant signs of stress in our consumer base,” he said. But inflation “is a bit of a mixed bag,” said Squeri. “It's a modest contributor to our strong growth in volumes, but inflation when combined with low unemployment also puts pressure on operating costs,” he said.