(Reuters) – Credo Technology Group Holding forecast fourth-quarter revenue well below estimates on Tuesday following a cut in orders from the cable maker’s largest customer, sending its shares down as much as 43% on Wednesday.
The stock, which fell to $11.07, is set for its worst day since going public in January last year at an issue price of $10.
Although the company did not disclose the name of the customer, Cowen analysts said they believed it was Microsoft Corp, which owns Azure, one of the biggest cloud services providers in the world.
Reuters could not immediately verify if Microsoft was Credo’s largest customer. According to a company filing, one of Credo’s customers accounted for 44% of its revenue in the second quarter of fiscal 2023.
Credo, which makes cables used in data centers, said it was expecting fourth-quarter revenue of $30 million to $32 million, below estimates of $58.3 million, according to Refinitiv data.
“The magnitude of the topline reset could be a concern for investors given also broader commentary on resilient Microsoft capex vs. most other Cloud/hyperscalers,” Mizuho analysts said in a note.
At least five brokerages cut their price target on the stock. Cowen slashed it the most by $7 to $11 and downgraded the stock to “market perform” from “outperform”.
Credo, which also designs chips, currently outsources all its semiconductor manufacturing to Taiwan Semiconductor Manufacturing Company.
Warren Buffett’s Berkshire Hathaway Inc had cut its stake in the Taiwanese chipmaker by 86.2% to 8.29 million sponsored American depositary shares, per a regulatory filing on Tuesday.
(Reporting by Chavi Mehta and Akash Sriram in Bengaluru, additional reporting by Lance Tupper in New York; Editing by Anil D’Silva and Arun Koyyur)
