Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) Failed To Brush Off Downgrade Impact With Yearly Growth In Sales

The market showed that it was all matter of perception that played into pushing the stock of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) down. Though the biggest contract chip maker reported a 33.8% year-over-year growth in sales, the market decided to weigh on its lower month-over-month sales. As per the reported released by the company, its revenues declined by 28.1% month over month to $1.99 billion on account of seasonality and three fewer working days. The company highlighted that the number still reflects 33.8% growth on a yearly basis, which the market rejected to consider.

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The company reported that the February sales are lesser than January and December month sales growth of 69.4% and 39.9% respectively, but are comfortably higher than the January-August 2014 levels. It said that the February numbers reflect the positives from Apple Inc. (NASDAQ:AAPL)‘s A8 CPU orders. Despite such affirmations, the investors relied more on research firm Pacific Crest’s recommendation on Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM). A day earlier, the research firm’s analyst Mike McConnell had cut the rating on the stock to ‘Underperform’.

Downgrade from Pac Crest

The analyst wrote in his note that the company faces the threat of declined orders as its customers’ inventories are already at record highs in the fourth quarter. McConnell supported his views stating that the January sales of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) only reflect Apple’s A8 CPU orders and have not accounted wafer order cuts from customers such as MediaTek and Qualcomm. At the same time, McConnell said that some of the Apple’s A9 CPU order will go to Samsung while upgradations at competitors may also eat up the company’s market share.

The disappointment of the Street was visible yesterday, when the shares of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) ended the day at $23.05, representing a nearly 2% fall.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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