TowerJazz sees lower first-quarter sales, shares fall

Thu Feb 14, 2013 5:07am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Tova Cohen

TEL AVIV (Reuters) - Chipmaker TowerJazz forecast a drop of about 32 percent in first-quarter revenue due to a contractual decrease in sales to Micron at its Japanese plant and as a consumer shift from PCs to tablets continues to affect part of its business.

Israel-based TowerJazz on Thursday forecast revenue of $110 million to $120 million in the first quarter, down from $168 million in the year-earlier period. Analysts were forecasting revenue of $142.5 million in the quarter, according to Thomson Reuters I/B/E/S.

Shares in the firm, which makes chips used in smartphones like Apple's iPhone and Samsung's Galaxy models as well as battery chargers and AC/DC adapters, were down 6.1 percent to 28.25 shekels in midday trade in Tel Aviv.

TowerJazz Chief Executive Russell Ellwanger said the company sees this revenue level as short term, in line with its supply agreement with Micron Technology, which sold its plant in Nishiwaki, Japan, to TowerJazz in 2011.

"The company sees growth through the year in revenue and profit," Ellwanger told Reuters. "The second half of the year will be stronger than the first half. I am very convinced the second quarter will be stronger than the first."

Besides a tapering off in sales to Micron, which was planned under the deal signed between the two companies, TowerJazz is also facing a decline in its discrete components business.

Weakness in sales of discretes, chips that are not integrated circuits (IC), was seen already in the third quarter.

As consumers opt to buy tablets instead of more expensive and larger personal computers, sales of discrete components have fallen. Manufacturers of the slim tablets use fewer discrete components, which take up a relatively large area.   Continued...