Why NXP Semiconductors NV (NASDAQ: NXPI) stock is under pressure

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NXP Semiconductors NV (NASDAQ: NXPI) stock lost over 4.4% on July 28th, 2020 (as of 4:16 am GMT-4; Source: Google finance) after the firm reported lower than expected Second-quarter of 2020 performance with revenues falling over 18% yoy to $1.8 billion, while GAAP operating margin reaching negative 8.0%. The group’s major end market is Automotive wherein the sector got severely hurt by the ongoing COVID-19 pandemic. Automotive sector revenue fell 32% to $674 million on a sequential basis while lost over 35% on a year over year basis.

However, management reported that they are seeing better than expected sequential trends in their other end markets. Industrial & IoT revenues reported a rise of 16% on a sequential basis to $435 million while mobile revenue rose 3% on a sequential basis to $255 million but lost over 14% on a year over year basis. Comm. Infra. & Other segmental revenue reported a rise of 12% yoy to $453 million but lost 9% on a year over year basis.

They are also witnessing early positive trends in China while sales out of their distribution channel also improved sequentially. The firm forecasts a better sales trends through the second half of this year, driven by their specific program ramps and the ongoing stabilization of their end markets.

As per the other financial metrics, cash flow from operations fell to $414 million as compared to $512 million in the March 2020 quarter. The net capex investments reached $74 million, leading to a non-GAAP free cash flow of $340 million. Management approved interim dividend of $0.375 per ordinary share during the second quarter 2020 while the firm returned $108 million to shareholders. The firm also issued unsecured notes for a total amount of $2 billion in May 2020 which includes $500 million with maturity 2025, $500 million matures in 2027 and the remaining $1 billion is a green bond that matures in 2030.

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