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SMTC - Semtech: (Early But Costly) Realization Of An Irreversible Mistake
Semtech Corporation
2024-05-23 01:38:42 ET
Summary
Semtech management quickly realized they overpaid for the acquisition of Sierra Wireless and may write down more of the remaining goodwill and intangibles.
The expected earnings supplement from the acquisition didn't materialize, but the company is chained to the debt secured for that purpose.
The company's debt from the acquisition will continue to burden the company, hindering its ability to improve margins and resulting in a disappointing trend in bottom line.
Unless the company is hiding an ace up its sleeves on Sierra Wireless, the outlook seems quite bearish on the stock price.