Synopsys shares fall after sales outlook misses estimates

ANSYS

04/12/2024 22:46

By Stephen Nellis and Zaheer Kachwala
       Dec 4 (Reuters) - Chip design software firm Synopsys
 SNPS.O  on Wednesday forecast fiscal 2025 revenue below Wall
Street expectations thanks in part to a slump in China sales as
the U.S. tightens controls on what chip technology can be sold
to the country.
    Shares of the Sunnyvale, California-based company fell 6.6%
in extended trading after the forecast. Synopsys Chief Financial
Officer Shelagh Glaser told Reuters the company still expects to
close its $35 billion deal to acquire engineering software firm
Ansys  ANSS.O  in the first half of 2025.
    Synopsys forecast fiscal 2025 revenue in the range of $6.75
billion to $6.8 billion, with the entire range below estimates
of $6.91 billion, according to LSEG data. 
    Glaser said that a change in Synopsys fiscal calendar to
make it easier to merge its financial reporting with Ansys
lowered the company's full-year revenue forecast by about $80
million. But the larger driver of the revenue was a continued
sales drop in China, where the U.S. earlier this week imposed
new limits on chip technology exports.
    Glaser said that the list of companies Synopsys can no
longer sell to in China has grown, and some of those Chinese
customers that remain are hesitating with plans for new chips
because of uncertainty around whether they will be able to have
the chips manufactured.
    "It's kind of a cumulative impact of restrictions," Glaser
said.
    Glaser said the election as U.S. president of Donald Trump,
who has promised to impose new tariffs on Chinese imports, did
not change Synopsys' outlook for closing the Ansys deal. 
     "We certainly have expectations that each jurisdiction has
its own criteria and reviews," Glaser said. "But that actually
was true from the beginning, and there was always going to be an
election." 
    Synopsys forecast adjusted earnings per share for the full
year to be between $14.88 and $14.96 per share, while analysts
expected $14.88 per share. 
    The company forecast first-quarter revenue between $1.44
billion and $1.47 billion, compared with estimates of 1.64
billion. 
    It expects adjusted EPS for the first quarter to be between
$2.77 and $2.82 per share, compared with estimates of $3.53 per
share. 
    Revenue for the fourth quarter ended Nov. 2 was $1.63
billion, in line with estimates. On an adjusted basis, the
company earned $3.40 per share, above estimates of $3.30 per
share.

 (Reporting by Zaheer Kachwala in Bengaluru and Stephen Nellis
in San Francisco; Editing by Krishna Chandra Eluri and Stephen
Coates)
 ((Zaheer.Kachwala@thomsonreuters.com;))