Coronavirus Impact on Supply Chain Is ‘Anyone’s Guess,’ Says Silicon Labs; Stock Down

It’s “anybody’s guess” how the coronavirus outbreak will affect the Chinese supply chain after production workers are due to return from the Lunar New Year holiday, said Silicon Labs CEO Tyson Tuttle on a Q4 call Wednesday. “We’re reading the news just like everybody else,” said Tuttle. “Our forecast and guidance takes a normal return from Chinese New Year into account. Things just shut down, and we’re going to see if things start back up on a normal pace. Our hope is that that’s the case.” The stock closed 13 percent lower Wednesday at $102.76 after Silicon Labs reported a 30 percent operating-profit decline for the year that it blamed on "a challenging macro environment." Silicon Labs had been looking at “opening up” the Z-Wave standard “for quite some time” before doing so last month (see 1912200003), said Tuttle. “We are big believers in open standards, and to be able to drive broad adoption.” Z-Wave “performed very well in 2019,” he said. “We saw an opening,” he said of the timing to widen Z-Wave. A “number of customers” were looking toward Z-Wave as “the right solution for a sub-gigahertz standard,” he said. “It’s a very robust standard and it’s widely deployed. You’ve got 100-plus million units of devices deployed out in the market. As companies are looking for a sub-gigahertz standard, it was our belief that we have an opportunity to make sub-gigahertz the wireless standard for IoT.” Q4 sales fell slightly from the year-ago quarter to $219.4 million. They're expected to fall sequentially in Q1, to $209 million to $219 million, with "Infrastructure up, Broadcast flat, and declines in IoT and Access." The company said it may have a loss. "Despite a challenging macro environment, we are pleased to have outperformed the market with secular growth drivers in IoT and Infrastructure providing some offset to macro weakness," said Tuttle.