Dialog Semiconductor (DLGS.DE), the maker of chips used in Apple (AAPL.O) and Samsung Electronics (005930.KS) smartphones, cut its revenue outlook and first-quarter earnings dropped as a result of ongoing softness in the smartphone market.

Quarterly earnings before interest and tax (EBIT), excluding special items, fell 58 percent to $29.9 million, the company said on Wednesday.

"As a result of the continuing softness in smartphone market demand, we now anticipate revenue for the full year 2016 to decline high single digit percentage year-on-year," it said.

Dialog shares were down 9.1 percent in early trading, hovering around a near 3-month low, at the bottom of a 0.2- percent lower STOXX Europe 600 Technology index .SX8P.

Dialog makes chips that manage power consumption of consumer electronic devices such as smartphones and tablet computers. Apple and Samsung Electronics are among its main customers.

Its order portfolio is seen as an early indicator for future smartphone sales. Last week Apple reported its first decline in iPhone sales and its first revenue drop in 13 years.

Taiwan Semiconductor Manufacturing Co (2330.TW), the world's largest contract chipmaker and Apple supplier cut its outlook for the global smartphone market last month.

"(The) outlook revision due to weakening smartphone demand is not surprising for us," said DZ Bank analyst Harald Schnitzer, who recommends to hold the stock. "(But) uncertainty surrounding (Dialog's) future performance is growing," he added.

By: DocMemory
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