Xperi Cuts Forecast on ‘Short-Term Challenges’ but Says HD Radio Never ‘Stronger’

Tech firm Xperi is “working through some short-term challenges in our business” that prompted the company to downgrade its full-year revenue forecast to $330 million-$385 million from $370 million-$445 million, said CEO Jon Kirchner on a Thursday earnings call. The disclosure sent Xperi shares tumbling 21 percent Friday to close at $17.75. Though several “customer, market-specific and timing factors” are hurting Xperi’s results in the near term, “we believe the fundamentals and industry trends supporting our business and opportunities set remains strong over the long term,” said Kirchner. Xperi is unsure about the timing and terms of the settlement of its patent licensing dispute with Broadcom, “though we believe that a strong catalyst exists on our Broadcom discussions before year-end,” he said. Other challenges facing Xperi “stem from specific customer issues, market competition on the low-end of the mobile market,” and “time shifts and expected execution of certain new licenses,” said Kirchner. “We believe all of these matters can ultimately be resolved and that the fundamentals of our business remain sound.” Xperi is particularly high on the rising market penetration of HD Radio, which drove a 21 percent revenue increase in the company’s automotive licensing business for 2017's first nine months, and a 14 percent Q3 increase from the same year-earlier quarter, said Kirchner. “The road map for this business has never been stronger and we think the technology we have today and the innovation we're focused on for the car will continue to drive future growth.” In Q3, Xperi “rolled out” multiple automotive HD Radio debuts in the U.S., including on the Tesla Model 3, Jeep Wrangler, Infiniti QX80, GMC Terrain, Mitsubishi Mirage and Nissan Rogue, he said. In Mexico, the Jeep Compass, Chrysler Pacifica and Mercedes E Class, A Class and GLA models also started shipping with HD Radio, he said. Mexican regulatory authorities also awarded new FM frequencies in the quarter “that will result in 50 new HD Radio stations throughout Mexico over the next 18 months,” he said.