Shares of the computer interface technology firm Synaptics Inc. made significant gains in late trading today after it posted fiscal first-quarter earnings and revenue that topped Wall Street’s expectations.

The company reported a net loss of $55.6 million in the quarter, down from a net income of $64.6 million one year earlier. Earnings before certain costs such as stock compensation came to 52 cents per share, well ahead of the Street’s call for a profit of just 38 cents. Revenue for the period plunged 61% from a year ago, to $237.7 million, but still well above the analysts’ forecast of $230 million.

Investors were clearly thrilled, as Synaptics’ stock rose more than 14% in after-hours trading at one point, before settling for a 9% gain.

Synaptics is a developer of human interface systems and software, including touchpads for laptops, touchscreen technologies, display drivers, human presence detectors, fingerprint biometrics scanners for smartphones and video and far-field voice technology for cars and smart home devices. The company is noted for inventions including the click wheel on the classic iPod, touch sensors on Android phones, integrated touch and display driver chips and fingerprint sensors, among other innovations.

With a business that’s obviously heavily reliant on sales of consumer and business hardware, it’s no surprise that Synaptics’ revenue took a big hit compared with its performance a year earlier. Sales of products such as personal computers, laptops, smartphones and smart home devices have all been hit hard in the wake of the crippling economic downturn.

However, Synaptics President and Chief Executive Michael Hurlston (pictured) said today there are strong signs that the company is about to turn the corner. For instance, the company grew its revenue on a sequential basis for the first time in over a year, he said. “We are starting to see stabilization in our business and expect recovery in calendar 2024 while we continue to work through excess customer inventories,” he said.

Constellation Research Inc. analyst Holger Mueller said the strong earnings and revenue beat might have impressed investors, but it doesn’t hide the fact that the company is reeling from the slump in PC sales. “With inventories still full and the channel stuffed, revenue is less than half what it was a year ago,” he said. “As a result, Synaptics swung from a nice profit to a loss.”

According to Mueller, Synaptics could have stemmed the losses had it managed to cut down its cost base, but it failed to do this. “Still, the damage to shareholder equity is manageable, and investors will be looking to see if the company can repeat its performance in Q1 by increasing its revenue on a sequential basis. If it can do that, investors will see it as an encouraging sign.”

It will be touch and go for the company, though. Looking to the next quarter, Synaptics said it’s targeting revenue in a rather wide range of between $220 million to $250 million, the midpoint of which is just below Wall Street’s forecast of $239.8 million in sales.

Even so, Synaptics Chief Financial Officer Dean Butler said it should be taken as a good sign that second quarter sales will remain at roughly the same level. “The company’s balance sheet is in great shape and capable of weathering the recent macro-driven headwinds,” he said. “Synaptics continues to generate positive cash flow enabling us to fuel the investments needed to execute on our stated strategy.”

Image: Synaptics/YouTube