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Investing.com -- Shares of MaxLinear (NASDAQ: MXL) plummeted 22% following the release of the company’s fourth-quarter earnings and forward guidance, which fell short of investor expectations.
MaxLinear, known for its RF and mixed-signal integrated circuits, reported a 26% decline in net revenue for the fourth quarter compared to the same quarter last year, although it noted a 14% sequential increase. The company’s GAAP gross margin improved slightly from the previous quarter but was down from the year-ago quarter. Operating expenses as a percentage of net revenue decreased sequentially but increased significantly in comparison to the previous year. The company’s GAAP diluted loss per share also worsened from $0.47 in the year-ago quarter to $0.68.
For the full fiscal year ended December 31, 2024, MaxLinear saw a significant revenue drop of 48.0% from fiscal 2023. Both GAAP and non-GAAP gross margins and operating expenses worsened compared to the previous year, leading to a substantial GAAP loss from operations of 62% of net revenue. The company’s net cash flow used in operations also contrasted starkly with the previous year’s positive cash flow.
In the company’s press release, CEO Kishore Seendripu expressed optimism about the company’s growth trajectory for 2025, citing improvements in customer orders and new product traction. He highlighted the success in the optical interconnect business and the strategic positioning for growth in various applications.
Looking ahead, MaxLinear’s guidance for the first quarter of 2025 estimates net revenue to be between $85 million and $105 million, with expected gross margins and operating expenses on both GAAP and non-GAAP bases. These projections did not meet the higher expectations that had been set by recent bullish management comments at industry conferences.
Needham analyst N. Quinn Bolton commented on the earnings, noting that while the fourth-quarter results were slightly better than expected, the guidance was only in line with consensus estimates and did not satisfy the more optimistic investor outlook. Bolton pointed out the anticipated doubling of optical revenue in the calendar year 2025 and improvements in bookings and backlog. However, concerns remain about the company’s declining cash balance and the upcoming arbitration hearing with Silicon Motion (NASDAQ:SIMO) in October. Bolton maintains a Hold rating on the stock, adopting a cautious stance as the business recovery unfolds.
Investors’ reactions to the guidance suggest they "may have been hoping for slightly stronger guidance," according to Bolton, reflecting the stock’s significant drop in today’s trading session.
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