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(Bloomberg) — Analog Devices Inc. said revenue in the current period may exceed its previous forecast range, indicating that demand remains strong and downplaying concerns that customers are stockpiling inventory. 

Chief Financial Officer Prashanth Mahendra-Rajah said Tuesday that the chipmaker’s sales growth is trending toward the higher end of its guidance for the fiscal second quarter and may beat the target of $2.8 billion, plus or minus $100 million.

Longer-term, the company sees revenue growing in the range of 7% to 10%, Mahendra-Rajah said at an event for investors. The company remains confident it will be able to report gross margins, the percentage of sales remaining after deducting costs of production, of more than 70%, he said.

Analog Devices specializes in analog and embedded computing components, a sector led by Texas Instruments Inc. Analog chips convert real-world things like sound and pressure into electronic signals, and the rush to add automation to factory equipment and buildings has stirred new demand. The move toward driverless cars also is fueling the market.

Like many of its peers, the company has posted a surge in sales and earnings over the last 12 months as it rushed to fill orders from automakers and other customers desperate for supply and willing to pay more to get it. Revenue across the industry jumped 32% in February to $52.5 billion, according to the Semiconductor Industry Association. Sales of chips have increased more than 20% for 11 straight months.

That rise has fueled concern that shipments are outrunning end demand for the products that use chips. The Philadelphia Stock Exchange Semiconductor Index has fallen 17% this year — following three annual advances of more than 40% — as investors bet that the industry is peaking. 

 

Mahendra-Rajah said that while investors are worried that there’s an accumulation of chip inventory — the usual precursor to a downturn — Analog Devices isn’t seeing it. 

“There’s a concern by customers that there’s no inventory available for them,” he said in an interview. “There’s still demand that needs to be met.” 

Like other management teams, Analog Devices leadership is arguing that the chip industry is no longer primarily dependent on computer and smartphone demand. Semiconductors are used in many more devices — ranging from industrial machinery to vehicles — and that diversification makes companies much less vulnerable to the sudden drops in orders that have characterized its past, Mahendra-Rajah said. 

His boss, Chief Executive Officer Vincent Roche, also repeated a forecast being made by several industry CEOs that the semiconductor business, which took about 45 years to reach $500 billion in sales, will double in size to $1 trillion in total revenue over the next decade. 

The shares of the Wilmington, Massachusetts-based company fell 2.8% to $159.98 at the close in New York amid a broad market decline. Though the company’s stock has dropped 9% this year, it is performing better than shares of many of its chipmaker peers.

(Corrects spelling of CEO’s name in the 10th paragraph of story published April 5.)

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(Bloomberg) — Vietnam’s stock market is building a case to be a safe haven among developing-nation peers, bolstered by a reopening of trade and tourism, accelerating economic growth and rising corporate earnings.

The benchmark VN Index is up over 1% this year, outperforming the nearly 8% decline in a MSCI gauge of Asia frontier market stocks. The index is just 0.4% shy of an all-time high and could continue its climb despite elevated inflation and headwinds from the war in Ukraine, money managers say.

Company fundamentals are one key reason for the optimism. Profit growth of the top 60 firms is expected to average about 23% this year on a free-float adjusted basis, said Bill Stoops, chief investment officer of the nation’s largest fund, Dragon Capital Group Ltd. Leaders like banks and property developers could even see growth of 30% compared to a year ago, he said.

Stoops, whose $6.4 billion firm mainly focuses on domestic companies, added that Vietnam’s trade surplus and small foreign debt cushions the economy from higher import costs. He prefers banks, property and steel stocks as well as IT-services providers like FPT Corp.

Investors are mulling the impact of Vietnam’s border reopening to foreign travelers after two years of Covid-related restrictions on the country’s economy. The government expects economic growth of as much as 6.5% this year, Southeast Asia’s fastest, as industries like manufacturing and tourism extend recoveries. Growth was about 2.6% last year. 

Earnings Impact

First-quarter earnings reports starting this month are expected to be positive, led by banks, real-estate and consumer firms, said Tran Hoang Son, head of market strategy at MB Securities. Expectations about bonus shares or dividends could also provide a catalyst, he added.

Vietnam stocks are top picks in Ruchir Desai’s portfolio at Hong Kong-based Asia Frontier Capital Ltd. A positive trade surplus thanks to higher exports as well as increasing foreign direct investment will allow the country to manage the impacts of higher U.S. interest rates, he said. 

Coupled with stronger earnings growth in the second half of the year, that could spark a “further re-rating” for domestic equities, he added.

Still, the war in Ukraine remains one of the biggest risks given that the strain on global supply chains and higher food and oil prices could ultimately hurt the inflation-sensitive VN Index, Desai said.

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(Bloomberg) — The House voted Wednesday to hold two former top Trump administration officials in contempt of Congress for defying subpoenas from the committee investigating the insurrection at the U.S. Capitol.

The 220-203 vote sends the contempt resolution against ex-White House Deputy Chief of Staff for Communications Dan Scavino and former trade adviser Peter Navarro to Speaker Nancy Pelosi for referral to the Justice Department for possible prosecution The committee’s two GOP members, vice chair Liz Cheney of Wyoming and Adam Kinzinger of Illinois, voted with all Democrats in favor of the action.

Scavino and Navarro are the third and fourth ex-advisers to former President Donald Trump to be held in contempt by Congress, amid ongoing legal battles over the authority of former presidents and their former aides to assert executive privilege as a shield from testifying to Congress.

“More than 800 Americans have come to testify before our committee,” Democratic Representative Jamie Raskin of Maryland, a member of the panel conducting the investigation, said on the House floor before the vote. “Four of them have categorically refused and blown off the subpoenas of the U.S. House of Representatives.”

Scavino and Navarro are defying the authority of the House “in order to avoid coming here to tell the truth,” he said.

There was no immediate comment Wednesday from lawyers for Navarro and Scavino on the House vote.

House Republican leader Kevin McCarthy argued that the contempt action against the two men “is about criminalizing dissent.”

“Two wrongs don’t make a right. The riot on Jan. 6 was wrong. But Democrats’ reaction to trample American civil rights is also wrong,” McCarthy said. “Do we really want to live in a country where politicians can seize your phone records, compel your testimony, and ignore your rights because they disagree with your politics?”

Pelosi appointed the committee of seven Democrats and two Republicans to investigate how and why a mob of Trump supporters stormed the Capitol shortly after a rally that featured Trump on the day Congress was meeting to certify the Electoral College votes from the 2020 presidential election. Trump has repeatedly made the false claim that his loss to President Joe Biden was the result of fraud.

Cheney said Scavino needs to answer specifically about his political social media work for Trump, including his interactions with an online forum called “The Donald” and with QAnon, which she called “a bizarre and dangerous cult.” She said Navarro has written a book boasting about his role with former Trump political adviser Steve Bannon in planning and coordinating activities with lawmakers on a process to stop the certification of Biden’s election victory.

Representative Bennie Thompson of Mississippi, chairman of the select committee, said Monday, when the committee voted to recommend the contempt citation, that the panel wants to question Scavino and Navarro on matters “that clearly fall outside” any possible claim of executive privilege. 

“Last I checked, a president’s attempt to stay in power after the people voted him out of office aren’t the sort of things where executive privilege applies,” he said.

The Biden administration has rejected assertions that former Trump aides and advisers have any legal shields from being compelled to testify or turn over records, and the committee has won some court victories regarding Trump records. Scavino’s lawyer has challenged White House lawyers to provide actual legal authority for Biden to render such a judgment on executive privilege “with respect to the congressional testimony of a former president’s close aides.”

Among those who have submitted to interviews by the committee are Trump’s daughter Ivanka Trump and her husband, Jared Kushner, both of whom served as White House advisers.

Bannon was indicted on two counts of contempt, each of which carries a potential a penalty of up to a year in jail plus a fine. A trial is set for July. The Justice Department has yet to act on the contempt citation against Trump’s last White House chief of staff, Mark Meadows.

The hundreds of interviews by the committee have been conducted behind closed doors. In addition, the panel has requested or subpoenaed records from individuals, social media and telecommunications companies as part of the inquiry. Thompson has said the committee plans to hold public hearings with witnesses as soon as May.

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(Bloomberg) — Toyota is seeing plenty of interest for good old-fashioned passenger cars as it says buyers increasingly prize affordability and availability when looking for a new set of wheels. 

The Japanese automaker attributes its ascendancy as the top-selling automaker in the U.S. — a rank it wrested from General Motors Co. late last year — at least in part due to the popularity of its compact and mid-size sedans, even though the market has overwhelmingly shifted toward light trucks such as SUVs and pickups in recent years.

Read more: Toyota Bests GM Again in Latest U.S. Tally: Auto Sales Update

“A lot of our market share growth is really in the car side of the business. Cars are still an important part of the market,” Bob Carter, Toyota Motor Corp.’s top sales executive in the U.S., told reporters at a briefing Wednesday.

Sedans made up just 22% of new vehicle sales last year, down from more than half of the market in 2009, according to automotive researcher Edmunds.com. Some automakers, including Ford Motor Co. and GM, have discontinued many or all of their passenger cars in favor of more popular SUV and truck models. 

But Carter said Toyota’s compact Corolla and large Camry sedans are more affordable than many pickups and SUVs, and passenger cars remain a popular option among many Asian, Black and Hispanic car buyers. “Unlike other brands that have exited the sedan market, we’re choosing to double down,” he said.

Shortages of semiconductors and other parts have crimped production across the industry and resulted in higher prices as demand exceeds supply. Inventories are so thin that pretty much anything can find a buyer, Carter said. 

“If we built cars with three wheels, there would probably be a consumer waiting for it,” he joked. 

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(Bloomberg) — General Motors Co. is preparing an advertising blitz as the company resumes production of its Chevrolet Bolt electric vehicle in a move to revive sales after recalling every one of them ever made because of rare but destructive battery fires.

GM said it will advertise the Bolt and slightly larger Bolt EUV electric vehicles during every Major League Baseball opening-day game on Thursday to tell consumers that the vehicle is back. Chevy will spend more advertising the Bolt this year than any vehicle in its lineup except its top seller, the Silverado pickup truck.

One thing GM won’t do with its advertising blitz is talk about the recall of the batteries made by LG Energy Solutions, which is the subject of federal probe for fires in batteries sold by several automakers. GM prefers to move forward now that it has fixed the battery problems.

“It’s always tricky,” said Steve Majoros, Chevrolet’s marketing director. “We have done a lot of work to understand the broad perception of the situation. We’re not going to publicly address and come up with some mea culpa. We don’t see broad reputational damage.”

The challenge for GM will be bringing buyers back to the Bolt after a year in which the company had to recall batteries for all 142,000 vehicles that were sold. The company had told vehicle owners not to park the vehicle inside and, in some cases, keep them 50 feet away from other vehicles.

The Bolt comes back just as the National Highway Traffic Safety Administration is investigating LG because of fires in the vehicles along with other models made by Stellantis NV, Volkswagen AG, Hyundai Motor Co. and Mercedes-Benz Group AG. 

For its part, GM and LG have said that they found a solution to the problem that caused 13 fires since the car went on sale in late 2016. The recall cost $1.9 billion with LG paying almost all of the bill because the fires were the result of a manufacturing defect in its plants. The two companies had examined batteries and found that a torn anode tab and a folded separator, which is supposed to keep the anode and cathode from touching, were the cause of the fires.

GM is expecting to have its best-ever year with Bolt and the Bolt EUV, Majoros said. The plant will be back at high production levels and will have enough batteries and semiconductor chips to get inventory to dealers.

Chevy sold a record 24,800 Bolts in 2021. With the Bolt coming back and the Hummer EV and Cadillac Lyriq in production, GM is working to get its EV ambitions back on track. 

“We’re coming on strong with this product,” Majoros said. “We see record numbers of sales and production for 2022 and we see 2023 being bigger than 2022.”

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(Bloomberg) — U.S. surveillance of Russia’s Ukraine invasion has been buttressed by two newer satellite systems built with commercial parts and on-board imagery processes, the head of the intelligence agency that manages the programs said in a rare public statement. 

Alongside orbiting spy satellites, the new systems built using commercial technology have “enabled NATO and the entire world to see in real time the Russian military buildup prior to its invasion,” National Reconnaissance Office Director Christopher Scolese said in prepared testimony Wednesday for a mostly closed-door House Armed Services subcommittee hearing.

The new systems, which Scolese said “went from concept to orbit in less than three years,” have since helped Biden administration officials provide a stream of detailed intelligence statements about Russian battlefield developments, missile launches, likely strategic goals and — this week — potential war crimes, without disclosing classified sources. 

“They illustrate our efforts to deliver capabilities more quickly, using a combination of commercial components and processes and government-sponsored capabilities,” Scolese said. “And they almost immediately started serving the needs of both warfighters and national policy makers.”

That includes foreign allies of the U.S. Working with the National Geospatial-Intelligence Agency, which produces precise, geo-located maps from the NRO imagery, “these products are being widely disseminated at the NATO Intelligence Fusion Center and shared with the U.S. European Command,” he said.

A Visual Guide to the Russian Invasion of Ukraine 

The Ukraine war isn’t the first time the technology has been employed for humanitarian or U.S. national security purposes. 

Before the invasion, the systems built on commercial technology “supported earthquake relief in Haiti, imaged areas over Afghanistan to support the evacuation of U.S. troops.” Scolese said. 

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(Bloomberg) — Elon Musk on Wednesday refuted reports that he had reduced his stake in Twitter, saying that an initial regulatory filing on his holdings in the social media platform contained the wrong number of shares.

A 13D filing on Tuesday showed that the Tesla CEO had taken a 9.1% stake in Twitter.  A disclosure to the SEC a day earlier had Musk owning 9.2%. 

Musk Risks New SEC Fight on Disclosure After Speedy Twitter Rise

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(Bloomberg) — SoFi Technologies Inc., which operates a business for refinancing educational debt, cut its guidance after President Joe Biden’s administration again extended the pause on student-loan payments. The lender’s shares slumped. 

SoFi now expects adjusted net revenue for the full year to total $1.47 billion, down from earlier guidance of $1.57 billion, the company said in a statement Wednesday after the close of regular U.S. trading. Adjusted earnings before interest, taxes, depreciation and amortization are likely to total $100 million, down from a previous forecast of $180 million.

Shares of SoFi dropped in after-market trading, falling 3.7% to $8.43 at 4:37 p.m. in New York.

SoFi’s student-loan-refinancing business has operated at less than 50% of its pre-pandemic levels for the past two years, Chief Executive Officer Anthony Noto said in the statement. The San Francisco-based lender said it expects the upcoming fall midterm elections to result in another payment extension beyond August, and that the moratorium probably won’t end this year. 

“SoFi has done an outstanding job achieving record financial results, member and product growth and consistent profitability, despite the negative impact of the extended student-loan-payment moratorium,” Noto said in the statement. 

The company said it still expects $280 million to $285 million of adjusted net revenue in the first quarter, and as much as $5 million of adjusted Ebitda.

Separately, SoFi said that SoftBank Group Corp.’s Michel Combes and Carlos Medeiros will step down from the lender’s board at the company’s annual meeting, while Clay Wilkes, founder of Galileo Financial Technologies, is departing immediately. As part of the resignations, SoftBank affiliate Delaware Project 10 LLC and Red Crow Capital LLC waived their right to designate nominees to the board, according to a regulatory filing Wednesday.

“Clay, Michel and Carlos have provided crucial guidance to the board and the management team as the company expanded into new products, raised significant capital, made a critical strategic acquisition, transitioned to being a publicly traded company and received a national bank license,” Noto said in a statement Wednesday. “Given all that we have accomplished, this marks a natural point to continue the transition of our board in regards to its size and composition over time.”

(Updates with board resignations in last two paragraphs.)

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(Bloomberg) — Comcast Corp.’s NBCUniversal reached a deal with Major League Baseball to show 18 games this season on its Peacock streaming service, the latest online player to grab a slice of baseball broadcast rights.

The games will stream on Sundays, with some starting at 11:30 a.m. Eastern time in the U.S., MLB and Comcast’s NBC Sports division said Wednesday. The early time slot will avoid too much overlap with baseball coverage on other channels. 

Major League Baseball has been divvying up rights and selling them to new streaming services to reach fans who don’t subscribe to cable TV. In March, Apple Inc. agreed to air Friday night games on its streaming service, marking the iPhone maker’s first major foray into sports broadcasting. 

With the latest deal, Peacock adds baseball to a lineup of live sports that includes Premier League soccer, Sunday Night NFL games and professional golf. 

The baseball games will be exclusive to Peacock and appear on its $4.99-a-month premium tier. 

Comcast plans to double its content spending for Peacock this year to attract more paying subscribers to supplement its advertising revenue. The service had 24.5 million monthly active accounts in the U.S. at the end of 2021. Of that number, more than 9 million were paying subscribers.

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(Bloomberg) — President Joe Biden plans to nominate a top aide to House Speaker Nancy Pelosi and a long-time Securities and Exchange Commission staffer to fill two top slots at the regulator, the White House said on Wednesday.

Jaime Lizarraga, a senior adviser to Pelosi, would take over for departing Democratic Commissioner Allison Herren Lee. Mark Uyeda, who has spent a chunk of his career at the SEC and is currently on detail to the Senate Banking Committee, would fill an open Republican seat on the five-person commission. 

Both picks require Senate approval.

If confirmed, Lizarraga and Uyeda would join the SEC at a time when Chair Gary Gensler is pushing to tighten regulations on Wall Street traders, hedge-fund managers and crypto firms. The agency last month also proposed requiring businesses to outline the risks a warming planet poses to their operations when they file registration statements, annual reports or other documents. 

 

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