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It has been about a month since the last earnings report for Amkor Technology (AMKR). Shares have lost about 25.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amkor Technology due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Amkor Q1 Loss Narrower Than Estimated, Revenues Beat
Amkor Technology reported first-quarter 2019 adjusted loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 15 cents.
Revenues of $895 million beat the Zacks Consensus Estimate of $880 million and were within the company’s guided range of $840-$920 million. However, revenues decreased 17% sequentially and 12.7% year over year.
The sequential decline in revenues was due to smartphone inventory correction and slowdown in the general market.
The company has been making efforts to channelize its resources in important growth areas like MEMS and sensors business, which focus on mobile and automotive applications. In this regard, Amkor recently added a third MEMS and sensor production line in Korea to attract more business.
The company remains optimistic about automotive business growth. Per market forecast, the automotive market will grow in high single digits in the coming years. The growth is expected to be driven by increasing electronic content. Given attractive value proposition for automotive customers, Amkor is poised to benefit going ahead.
Revenues by Product Lines
The revenue mix in terms of product lines is discussed below.
Advanced Products, which include flip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages, accounted for approximately 47% of first-quarter revenues. Revenues decreased 25.2% sequentially and 11.3% year over year.
Mainstream Products, which include lead frame packages, substrate-based wire bond packages and MEMS packages, accounted for the remaining 53% of first-quarter revenues. Revenues decreased 8.5% sequentially and 13.8% year over year.
Margins
Per the press release, gross margin of 13.5% was at the high end of the guided range, primarily due to higher sales and favorable product mix. However, gross margins were down 340 basis points (bps) sequentially and 190 bps from the year-ago quarter.
Operating expenses of $107.3 million decreased 11.8% year over year due to decreased employee compensation costs and reduced discretionary spending.