Power Integrations Inc. (Nasdaq: POWI) plummeted 35 percent Friday after news of a profit warning overpowered the company's announcement that it settled a patent infringement lawsuit against Motorola (NYSE: MOT).
Shares in the company, which makes integrated circuits to reduce energy consumption of computers, cellular phones, and VCRs, were down 17 1/2 to 31 3/4
Under the agreement over the patent lawsuit, filed in August of 1998, Power Integrations will continue as a preferred supplier of high-voltage power conversion ICs for cellular phone chargers that Motorola manufactures. The companies will develop future generations of cellular phone chargers for Motorola.
"Although we believe that this settlement paves the way for us to achieve long-term revenue expansion with Motorola, it will not have any favorable impact on our financial performance in the near term,'' said CEO and president Howard Earhart in a company release.
Weaker than anticipated demand has caused the company to cut its first quarter revenue estimates. It now sees revenue of between $26.5 million and $27.5 million, below consensus expectations of a flat sequential quarter. The company will report official results for the first quarter on April 17, 2000 after the close of market.
The company's competitors include Motorola, which also accounts for about 15 percent of sales, as well as Samsung and STMicroelectronics (NYSE: STM).