The commercialization of 5G is “progressing” well and on track to add “an estimated 190 million subscribers in 2020,” said Keysight Technologies CEO Ron Nersesian on a fiscal Q3 investor call Thursday. The company markets 5G test solutions and is making strategic investments in next-generation “semiconductor process technology” for 5G smartphones. Device design and development investments in 5G “continue to be strong, driven by the large-scale ramps in Asia,” said Nersesian. “As 5G deployment expands and ongoing innovations gain customer interest, we continue to see strength in R&D.” Keysight’s “end-to-end solutions for the 5G life cycle” for wired and wireless “are enabling the ecosystem to scale from product development to deployments,” he said. Its 5G platforms are in use at “all the leading test houses worldwide,” he said. That’s helping “rapid adoption” of open radio access network (ORAN) technologies, he said. The “bulk” of the 5G opportunity is “ahead of us, and millimeter-wave commercialization is “still in its early days,” said Nersesian. Keysight’s recently launched PathWave software suite “accelerates 5G design, simulation and verification workflows” that “speeds time to market,” he said. The 5G industry “continues to progress in a very strong manner,” said Satish Dhanasekaran, president of Keysight's Communications Solutions Group. “There have been some pushouts in some parts of the world, acceleration in others.” Keysight’s long-term 5G outlook “remains unchanged,” he said. “We look at it both from deployments and actually the number of devices that are going to be manufactured this year. So pretty strong from that point of view.” Keysight has “some strong drivers going” for its 5G business, including the ORAN toolkit it just launched “to enable developers there,” said Dhanasekaran. Though there isn't a “big player yet that's emerging” in ORAN, “there's a lot of customers,” he said. Dish Network bills itself as the only U.S. company building a 5G network to ORAN standards, and doing so from "a clean sheet of paper" (see 2008070046). The stock closed 6.8% lower Friday at $95.88.
All companies face uncertainties from the global pandemic, but also increasing trade tensions between the U.S. and China, said Alibaba CEO Daniel Zhang on a fiscal Q1 investor call Thursday: “As the world's largest e-commerce platform, Alibaba's primary commercial focus in the U.S. is to support American brands, retailers, small businesses and farmers to sell to consumers and trade partners in China as well as the other key markets around the world.”
Nvidia’s gaming business finished Q2 “significantly ahead of our expectations,” said Chief Financial Officer Colette Kress on a Wednesday investor call. Revenue of $1.65 billion was up 26% year on year and a 24% increase sequentially from Q1, she said: “The upside is broad-based across geographic regions, products and channels.” Gaming’s growth amid COVID-19 “highlights the emergence of a leading form of entertainment worldwide,” said Kress. The number of daily gamers on Steam, an online gaming distributor, is up 25% from pre-pandemic levels, she said. NPD reported U.S. consumer spending on videogames grew 30% in Q2 to a record $11 billion, she said. “We ramped over 100 new models with our OEM partners focused on both premium and mainstream price points.” In Nvidia’s “mainstream” segment, “we brought the GeForce GTX to laptop price points as low as $699,” she said. The explosive growth in gaming demand isn't temporary, said CEO Jensen Huang. The pandemic made gaming “the largest entertainment medium in the world,” he said. Huang thinks “this way of enjoying entertainment digitally has been accelerated as a result of the pandemic,” and it’s not “going to return” to pre-COVID-19 levels, he said. COVID-19 office closures dealt a significant Q2 blow to Nvidia’s professional visualization business, said Kress. Revenue in the segment was down 30% from the 2019 quarter and off 34% sequentially from Q1, reflecting broad-based demand declines in mobile and desktop workstations, she said. Work-from-home initiatives drove enterprise demand for Nvidia “virtual and cloud-based graphic solutions,” and Q2 bookings in those segments jumped 60% from the 2019 quarter, she said. The pandemic will have a “lasting impact on how we work,” said Kress. Nvidia’s revenue mix going forward “will likely reflect this evolution in enterprise workforce trends, with a greater focus on technologies such as Nvidia laptops and virtual workstations that enable remote work and virtual collaboration,” she said. Vehicle factory closures sent Nvidia’s Q2 automotive revenue tumbling 47% from the 2019 quarter and down 28% sequentially from Q1, said Kress. Factory production volume got progressively better in the quarter “after bottoming in April,” she said. Mercedes-Benz, starting in 2024, will launch “software-defined intelligent vehicles” across its entire fleet using Nvidia’s “full technology stack,” said Kress.
The holiday season amid COVID-19 “is going to be particularly tricky to plan,” said BJ’s Wholesale Club CEO Lee Delaney on a Q2 investor call Thursday. “A fair amount of work has gone into really thinking through the implications and how we should plan the stores and the online offerings” in the general merchandise business, which includes consumer tech products, said Delaney. It’s trying to “buy into new categories in a bigger way,” he said. “So we are looking at exercise equipment and textiles and consumer electronics and connected home devices, because our baseline assumption is you will still have a large amount of people either working from home or spending more times in their homes and the investment in people’s homes will continue. And so we are shifting the equipment pretty meaningfully in that direction.” Q2 general merchandise sales jumped 22%, partly on strong TV sales in the quarter, said Chief Financial and Administrative Officer Bob Eddy.
The Food and Drug Administration acknowledged missing its statutory deadline under the FDA Reauthorization Act of 2017 for proposing the rule to create a category of over-the-counter hearing aids for people with mild or moderate hearing loss. Section 709 of the statute gave the FDA three years after enactment to release the proposed rule for public comment. The three-year deadline was Tuesday. "Although FDA staff are tirelessly working to meet the urgent needs of COVID-19 patients and health care providers during these unprecedented times, issuing the proposed rule remains a priority and we are working expeditiously to do so," emailed a spokesperson Thursday. The agency hopes to release the proposed rule in the fall, and "appropriate timing updates will be available at that time," she said. It will post the proposed rule in the Federal Register and open a docket for public comment, plus promote it through web updates and other "agency communications," she said. Section 709 is silent on how long the comment period should last, but requires the FDA to publish the final rule creating the OTC category no more than 180 days after comments close. CTA has a certification logo waiting to identify reputable OTC hearing aids meeting minimum voluntary performance criteria in the ANSI/CTA-2051 standard approved in January 2017 (see 2007180003). The logo is useless until the FDA creates the OTC category.
The COVID-19 pandemic “shined a spotlight” on the broadband divide and the digital “skills gap” in the U.S., neither showing signs of abating, Microsoft President Brad Smith told an Axios webinar Thursday. Both were “here last year,” but their impact “is even greater in the current economic climate,” he said. American Federation of Teachers President Randi Weingarten joined Smith on the webinar, urging deploying and regulating universal broadband as “a fact of life.”
Analog Devices, Inc. (ADI) is seeing “promising evidence that a broad-based recovery is underway” from COVID-19, said CEO Vincent Roche on a fiscal Q3 earnings call Wednesday: “We recognize that the recovery is highly dependent on the future impacts of the pandemic.” The quarter ended Aug. 1. As ADI progressed through the quarter, “we saw stronger than anticipated demand,” plus fewer cancellations and “higher than anticipated backlog conversion,” said Chief Financial Officer Prashanth Mahendra-Rajah. Business-to-business revenue in the quarter was up 11% sequentially from fiscal Q2, he said. Growth was flat year over year, “as strength across industrial and communications offset a sharp decline in automotive,” he said. Communications was 25% of quarterly revenue and was up 14% year over year, said Mahendra-Rajah. ADI had double-digit increases in its wireless and wireline “end markets,” he said: “This strength came from our leadership position in 5G wireless systems and our solid position in optical connectivity used in carrier networks and data centers.” Q3 automotive revenue fell 29% from the 2019 quarter, “with all applications declining due to global factory shutdowns and lower vehicle sales” during the pandemic, said Mahendra-Rajah. Though no company is “immune” from COVID-19, revenue from growing adoption of ADI’s automotive audio bus infotainment platform is up more than 70% “year to date, despite lower vehicle sales,” he said. Revenue in ADI’s consumer business was down 13% from a year earlier, said Mahendra-Rajah. “Relatively flat” revenue from sales of components in portable devices “was more than offset by double-digit declines in prosumer, due to the pandemic-related softness,” he said. “We continue to expect 2020 to be the bottom for our consumer business.” Roche has been in the communications business a long time, dating to the “inception of 2G,” said the CEO in Q&A. “The patterns we’re seeing in 5G are no different than what we saw in 2G, 3G or 4G,” he said. The story of 5G has been about “giving more bandwidth to the consumer,” said Roche. “The future is about B2B, more so, than the consumer. We’re beginning to see the early adoption of 5G in the factory automation area. In fact, I have verified that with some of our industrial automation customers.”
NPD forecasts Q4 consumer tech sales will rise 18% from the 2019 quarter, about twice the level of increase of NPD predictions made at the beginning of the COVID-19 pandemic, Stephen Baker, vice president-technology, told an NPD webinar Wednesday. NPD projects tech sales in first-half 2021 will increase 10% over the comparable 2019, disavowing 2020 as a comparative “baseline” due to the year’s volatility, he said. “While we don’t expect lines of people waiting on Black Friday,” it’s reasonable to expect “lines of cars,” said Baker. About 36% of online sales in Q2 were buy online, pick up in store (BOPIS) transactions, he said. Baker expects “incremental growth” in BOPIS over Thanksgiving weekend, he said. Baker isn't worried that the extraordinary volume of tech sales occurring during the pandemic is “pull-in” demand that will diminish holiday spending later in the year, he said. “In an environment where demand is infinite, pull-in doesn’t really make any difference,” he said. “We keep worrying about this, but the demand remains there. We’re seeing 20% revenue growth every single month for the last five months. Even if that demand is being pulled in, there’s demand behind it.” That’s one of the reasons “we are increasingly bullish” about the holiday outlook, said Baker. “Anybody who knows me knows I was pretty bearish in the early part of this. Our thought process has evolved over time.” The 18% increase NPD expects for Q4 tech revenue growth is an “historic-type number,” he said. “There remains a huge amount of unmet demand that obviates the challenges around pull-in and gives an enormous base to work against.” E-commerce was 70% of consumer tech revenue at the end of Q2, said Baker. That’s about 20 percentage points higher than it was at the beginning of 2020, he said. “Certainly we’re not going to stay there,” but it’s likely that online as a percentage of tech sales will “permanently” stay above 60%, he said.
Cree views 5G as a “multiyear expansion, with major traction coming,” said CEO Gregg Lowe on a Tuesday investor call. The company supplies silicon-carbide RF and power chips for 5G infrastructure applications. “There have been a number of recent announcements coming out of Asia pointing towards growing 5G momentum in that region. While the global pandemic has further delayed some rollouts in other regions, we continue to be well positioned to support this global expansion.” Cree stopped shipping to Huawei “for the better part of a year” after the Commerce Department’s export ban took effect, said Lowe: “We have no Huawei revenue plans in any of our future projections or forecasts.” Any “large impact” from Huawei, “we've basically taken it out of the picture,” he said. “We have developed good relationships with other players around the world and are repurposing the technology that we had developed for Huawei for those customers.” Lowe concedes the “Huawei situation was a pretty significant setback for us,” he said. “But we've adjusted our plans, we've adjusted our focus to go after non-Huawei customers.”
China's COVID-19 response “can stand the test of time and history,” said a Foreign Affairs Ministry spokesperson Wednesday. “China's enormous sacrifice and contribution to the global fight against COVID-19 is there for all to see.” President Donald Trump postponed trade negotiations with China because he regards its handling of the pandemic as “not even thinkable,” he told reporters in Yuma, Arizona, Tuesday. “With what they did to this country and to the world, I don’t want to talk to China right now,” said Trump. Asked if he was going to pull out of the phase one trade deal, Trump responded: “We’ll see what happens.”