(Bloomberg) -- Dialog Semiconductor Plc reported 2018 earnings that beat analyst expectations, but told investors to expect a revenue decline this year as a result of changes to its relationship with largest customer Apple Inc.
The British chipmaker said revenue from sales of its power-management technology would fall "by single-digital percentage points." In October, Apple signed a $600 million deal with Dialog to license the U.K. chip designer’s power management technology and acquire certain assets, including more than 300 staff.
Shares in Dialog rose as much as 4 percent in early trading London on Wednesday, and are up over 20 percent in 2019.
The agreement with Apple came almost a year after Dialog warned investors that its major customer could start designing its own power-management chips. Dialog relies on Apple for about three-quarters of its revenue, predominantly through the supply of chips that handle charging and manage power in smartphones.
Dialog’s deal with Apple caused shares of Dialog to rally the most in almost two decades, but the stock still languishes below its recent peak in 2017.
"We find this transformation of Dialog’s business compelling," analysts at Barclays said in a note, "and think its current valuation overly discounts the risk associated with the company’s evolving business model."
Of the 15 analysts tracked by Bloomberg that rate the stock, eight maintain a buy position, six advise to hold, and one advises to sell.
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