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Nordic Semiconductor’s Earnings sparked by Internet of Things Devices

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Nordic Semiconductor (NDCVF) reported solid revenue totals for the first quarter of 2014.  However, the real excitement was that the firm’s revenue growth was sparked by a revenue segment related to the Internet of Things.

Nordic Semiconductor is responsible for the design, sale and delivery of integrated circuits as well as intellectual property to be used in short-range wireless applications. The firm is a market leader in terms of ultra-low power wireless technology.   Nordic offers ultra-low power wireless chips based on its BlueTooth Smart Technology and 2.4 GHZ Radio technology. Nordic Semiconductor has been heavily involved in the development of BlueTooth Smart Technology.

The technology enables battery-powered devices and accessories to connect with conventional BlueTooth devices while limiting power consumption. This technology serves as the new protocol for ultra-low power wireless communication.

The success of BlueTooth Smart technology is crucial considering that Nordic Semiconductor views the technology as a key  for connecting the Internet of Things. Last quarter, Nordic Semiconductor’s revenue grew by 27% from the first quarter of 2014 to a total of 31.5 million dollars.

Due to the seasonality of Nordic Semiconductor’s consumer demand, the first quarter is typically a down quarter in terms of revenue.  Thus, this total may set the stage for strong revenue totals for the rest of the year.  The firm’s gross margin grew by 4% year-over-year to a total of 51%.  This was due to a change in the sales mix towards smaller, new customers that were undoubtedly more profitable.   Additionally, Nordic Semiconductor’s net profit doubled year-over-year to a total of $662,000. As mentioned before, Nordic Semiconductor’s revenue segments tell the real story.

Nordic SemiConductor’s mobile/wearable devices segment benefited from substantial growth in consumer demand for wearable electronics containing BlueTooth Smart Technology.  Revenue for this segment increased by a whopping 194% year-over-year to a total of $11.377 million dollars.  Additionally, revenue for the BlueTooth Smart Technology segment increased by 387% to 9.288 million dollars. As you can see in these next two pie charts, the BlueTooth Smart Technology revenue segment increased subst antially as a % of Nordic Semiconductor’s revenues between 2013 and 2014.

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As seen in the charts below, the mobile/wearable devices segment has also grown as a % of revenues.

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Nordic’s installed sensor networks revenue segment increased by 42% from last year.   This occurred due to strong growth via sales of RFID solutions. Nordic’s revenue increase was partly offset by a 126% decline in the ASIC Components and consulting revenue segment.  Nordic Semiconductor made a strategic decision not to invest in any acquisition of new customers within this segment.  Therefore, they are only targeting existing customers. The firm expects demand for its wireless solutions to increase exponentially as the Internet of Things movement rounds into shape.  If the Internet of Things is a wave, then Nordic Semiconductor is riding its crest.

Andre Waldron

Andre Waldron is the founder of Market Eyewitness. He provides financial analysis and commentary on equities, economic indicators, industries and mutual funds. In addition, Andre Waldron is also a contributor to Seeking Alpha as well as The Street. Andre Waldron is also the author of an upcoming e-book entitled "How To Boost Blogging and Social Media Efficency: Strategies For The Busy Professional". The e-book is set for release on December 15th 2014. It is available for pre-release now.

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