Despite all the good things happening in the semiconductor industry right now, Xilinx seems to be missing out. While the stock shot higher thanks to Intel’s breakout quarter on Tuesday, the share price sank right back down after Xilinx reported its own numbers a day later. The 2-cent beat was great and all, but Wall Street frowned on the company’s shrinking gross margins, a key metric for chipmakers.
There was other bad news as well. Only two end markets – consumer and wireless – grew last quarter, and they are the only two that Xilinx expects to grow in the near future. Also, the company failed to capitalize as much as it had wanted to on China’s wireless build-out, even though Asia now accounts for the biggest part of Xilinx’s business. Production issues, it appears, kept a new chip from reaching market fast enough to meet the increased demand.
Now, Cramer recommended Xilinx back on March 17 as part of his tech-spec trading series, and the stock is still about the same price it was then, near $20. He said those production issues had come and gone, but he wanted to check in with the CEO, Moshe Gavrielov, before recommending XLNX. Considering PPG Industries made viewers some mad money after its chief executive appeared on the show on June 11, Xilinx might offer the same opportunity.
Watch the video for Cramer’s interview with CEO Moshe Gavrielov.
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