EUR 850.00 For Business Accounts Only

Morningstar | Leadership Shakeup Highlights Very High Uncertainty at Synaptics

After the close of markets on March 15, Synaptics announced the immediate departure of CEO Richard Bergman, who had served in the role since joining the firm from AMD in 2011. His departure was preceded by the early February exit of CFO Wajid Ali, who was replaced by the internal promotion of Kermit Nolan. The current nonexecutive chairman, Nelson Chan, has stepped into the executive chairman role to facilitate a smooth business transition as the firm begins to search for new leadership. Management also updated its outlook for the upcoming fiscal third-quarter results, with revenue and adjusted earnings per share toward the low end of previous guidance of $340 million to $380 million and $0.70 to $1.00, respectively. The revision in outlook was due to ongoing soft demand in China, where the firm derived nearly 60% of second-quarter sales. Our prior forecast for the upcoming quarter was near the midpoints of the original guidance, so this revision is not a significant shock to our current outlook. However, the recent turmoil on the executive team is obviously cause for concern, so while we are maintaining our fair value estimate of $55, we reiterate the very high uncertainty rating for the firm. Despite revenue opportunities in touch, display, and audio and video solutions for devices and "Internet of Things" products, the firm lacks moatworthy competitive advantages.