Shares of NXP Semiconductors N.V. were trending lower in late trading today after the chipmaker provided an earnings and revenue outlook that disappointed investors.

That came after it posted second-quarter results that fell more or less in line with analysts’ estimates. The company reported earnings before certain costs such as stock compensation of $3.20 per share, while its revenue declined 5% from a year earlier, to $3.13 billion for the quarter ended June 30. Wall Street’s analysts had been looking for earnings of $3.20 on slightly lower sales of $3.12 billion.

The results were solid enough, but the Dutch chipmaker’s guidance for the current quarter was unable to get investors excited. Looking to the third quarter, it’s forecasting earnings of between $3.21 and $3.63 per share, the midpoint of which came in below Wall Street’s target of $3.56 in earnings.

Similarly, NXP said it’s looking for third-quarter revenue of between $3.15 billion and $3.35 billion, trailing the Street’s consensus estimate of $3.35 billion.

NXP’s stock had been on a roll prior to the earnings report, gaining more than 5% in the regular trading session. However, those gains quickly disintegrated, and the stock was down more than 8% in early post-market trading.

NXP President and Chief Executive Kurt Sievers (pictured) said the company’s guidance suggests that the company has navigated the “cyclical trough” in its business successfully. “We expect to resume sequential growth,” he insisted. “We continue to manage what is in our control, enabling NXP to drive resilient profitability and earnings in a challenging demand environment.”

The company is quite unlike most other chipmakers in that it has been less of a beneficiary of the rampant demand for artificial intelligence computer chips. The company sells a wide portfolio of processors to customers in multiple industries, but its largest segment is the automotive industry, where its chips power everything from car infotainment systems to tire pressure monitoring systems and vehicle-to-vehicle communications. Its other main business segments include chips for identification, wired and wireless infrastructure, lighting, consumer, mobile and computing applications.

The automotive segment pulled in revenue of $1.73 billion, down 7% from the same period one year earlier and 4% on a sequential basis, compared to the prior quarter. On the other hand, the Industrial and IoT unit delivered $616 million in sales, up 7% from a year earlier and also up 7% sequentially.

The mobile segment delivered $345 million in sales, up 21% from a year earlier and 1% sequentially, while the communications, infrastructure and other segment generated $438 million in revenue, down 10% from a year earlier and 23% sequentially.

NXP’s latest results are a reminder that not every chipmaker’s fate is entwined with that of the artificial intelligence industry, said Holger Mueller of Constellation Research Inc. He explained that the company is much more of an old-school chipmaker, operating in more established industry segments and exposed to the cyclical nature of the industry.

“Diversification is normally one of NXP’s strengths, but in recent months that hasn’t worked out so good, with gains in its industrial and IoT and communications infrastructure businesses offset by the decline of its automotive and mobile segments,” Mueller said. “For now, NXP’s management needs to buckle up and repeat what it did in the most recent quarter, delivering to guidance and trying to find new avenues for growth.”

Seeking Alpha analyst Stephen Simpson recently raised concerns about the health of NXP’s major end markets for the rest of fiscal 2024.

“Auto demand has clearly slowed, with the S&P 500 recently revising its outlook for auto production to negative 1%, and EV penetration coming short of expectations,” he said last month. “NXP can offset that with content and platform wins and well-managed inventory, but it’s an area to watch.”

Photo: NXP Semiconductors