Peregrine Semi sees shares rise and fall with Apple

The company makes some of the components for the iPhone and other devices.

By Benzinga Nov 11, 2013 3:02PM

Caption: Sign of the Peregrine Semiconductor Corporation is displayed (Courtesy of Peregrine Semiconductor Corporation via Facebook)By Louis Bedigian


Peregrine Semiconductor (PSMI), one of the lesser-known suppliers for Apple's (AAPL) iDevices, is fairly diverse.


The company supplies antenna switches to companies like Murata (MRAAY), which builds RF modules that are sold to virtually every smartphone manufacturer in the world.


Thus, Peregrine components can be found in everything from the Galaxy S4 and Galaxy Note 3 to the iPhone 5S and iPad Air. But because the components are so small (and are well hidden inside of Murata's modules), they may not be uncovered by a generic product teardown.


"A lot of times when people first do teardowns, they don't see Peregrine parts," Jim Cable, CEO of Peregrine Semiconductor, told Benzinga. "But you have to do a little more detailed teardown and you have to look inside the Murata module and then you'll see our die."


Cable said that while he has not tested Apple's latest tablet, he is tempted to buy one.


"I used to have this strategy of, every time one of our products ended up in a high-profile device, I liked to buy it," said Cable. "But it's gotten so that's crazy. I can't buy every generation of Samsung (SSNLF) and every generation of LG and every generation of Nokia (NOK) and now every generation of Apple. I still have a hankering to get the iPad Air. I've been told that it works very, very well."


The Apple supplier reatment

In the past, suppliers liked being associated with Apple.


Today that association could be dangerous to a company's stock price -- especially if investors don't know the whole story.


"Our stock tends to trade with a very high correlation to Apple and some of the Apple component vendors," said J. Goldberg, Peregrine's senior director of corporate development. "So a year or two ago, when we were first getting ready to go public, being a component in the iPhone was a good thing and all those companies had premiums attached to their multiples.


"Now, for whatever reason the Street is down on Apple stocks. Even though we're much more diversified -- Apple is a much smaller share of our revenue -- we're still sort of seen as an Apple supplier and we have the discount that all the other Apple suppliers get."


Peregrine's sequential revenue is expected to go down in the December quarter, but Goldberg said that has more to do with industry transitions than anything else.


Goldberg said that this is true for all semiconductor companies. He said that almost all of Peregrine's peers had a strong third quarter but noted that their Q4 earnings are looking a little bit lighter.


Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.


Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga.


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