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CRASHING OF THE SHARES OF THE MACOM TECHNOLOGY

MACOM technology is a chipmaker supplying optical and wireless networks. The shares of the company crashed.

MACOM technology is a chip maker supplying optical and wireless networks. The shares of the company crashed. It careened even lower than 20% of the after-hours trading in the stock market. MACOM is an optical play producing the woes nicked fiber optic stocks like the Lumentum (LITE), Finisar (FNSR) and Oclaro (OCLR).

 

WHAT EXACTLY HAPPENED

MACOM Technology Solutions Holdings, the analog semiconductor company, saw the disappointing fall of the shares after the third-quarter report. The stock was down by 23% at 12:45 PM on 2nd August. The further quarter guidance of MACOM was not impressive.

 

CONSEQUENCES OF THE FALL

MACOM, with revenue of $194.6 million with a rise of 36.7% every year, lags $1.35 million behind the average estimate of the analysts. John Croteau, the CEO of MACOM, stated one of the major reasons for the downfall to being the weakening of carrier spending in China. Another reason remained to be the rapid transition away from the 2.5G. China saw the weakening of the metro long-haul business too.

Despite the downfall, Croteau wants to emphasise on the growing segments of MACOM’s business. He stated that despite the decline in the Optical, the strong growths in Data Center Business are now currently making up for the 30 percent of the total company revenue. He claimed that MACOM is busy to ramp the supplies needed for meeting the demands of the Cloud-based businesses.

Non-GAAP EPS came in at the $0.67, a rise from the $0.51 in the previous year, but it again fell short of the expectations of the analysts’ by $0.02. the adjusted operating margin saw a rise of 2.7%, making it 27.2% in total while the adjusted gross margin saw a rise of 1.2% points to 58.5%.

 

THE MEASURES TAKEN

Now, owing to the lack of certainty in the China business, MACOM has started being a little conservative with the fourth quarter guidance. The company has forecasted a revenue range that lies between $165 million to %174 million with the non-GAAP EPS ranging between the marks of $0.45 to $0.50 only.

These numbers are in comparison to the $0.54 of non-GAAP EPS and $152.7 million of the revenue of the previous year. The investors have now pushed back the stocks owing to the expected slow growth of the revenue along with the expected slowing down of the earnings.