Fabless semiconductor company
Mellanox Technologies Ltd
) reported first quarter 2013 loss of 14 cents per share
(including stock-based compensation), deteriorating from 34 cents
per share earned in the year-ago quarter. However, loss per share
was narrower than the Zacks Consensus Estimate of a loss of 20
On non-GAAP basis, earnings per share were 10 cents compared
with 51 cents per share in the year-ago quarter.
Total revenue for the quarter was down 6.4% year over year to
$83.1 million. Reported revenue beat the Zacks Consensus Estimate
of $81.0 million.
) with 16% and
International Business Machines Corp
) with 19% were the two customers who accounted for 35% of the
Non-GAAP gross profit was down 8.9% from the year-ago quarter
to $56.6 million, primarily due to lower revenue base. Gross
margin for the quarter stood at 68.1% compared with 70.0% in the
year-ago quarter. Including stock-based compensation, gross
profit came in at $56.1 million.
Non-GAAP operating expenses jumped 31.7% year over year to
$51.7 million. This was primarily due to a sharp rise in research
& development (up 30.5% year over year), sales &
marketing (up 29.2% year over year) and general &
administrative expense (up 46.2% year over year) in the
Non-GAAP operating profit for the quarter was $4.9 million
down from $22.8 million in the year-ago quarter, primarily due to
higher operating expenses. Operating margin was down from 25.7%
in the year-ago quarter to 5.8%. Including stock-based
compensation, Mellanox reported operating loss of $5.5
Non-GAAP net income was down from $22.0 million in the
year-ago quarter to $4.3 million. Including stock-based
compensation, net loss came in at $6.1 million.
Mellanox exited the quarter with $396.2 million in cash and
investments versus $426.3 million in the previous quarter. Cash
used in operations was $6.6 million compared with $24.5 million
cash provided by operations in the previous quarter.
For the second quarter of 2013, total revenue is projected in
the range of $92.5 million to $97.5 million and gross margin in
the range of 68% to 69%. Operating expenses are expected to
increase 10.0% to 11.0% on a sequential basis.
Mellanox reported tepid first quarter results and also
provided tepid revenue guidance on a year-over-year basis.
However, we believe that Mellanox's product offerings such as
InfiniBand products and Ethernet solutions will help the company
to drive top-line growth.
However, sluggish macroeconomic environment, and increasing
competition from its peers such as
) may act as headwinds going forward. Moreover, customer
concentration could be another headwind for the stock.
Currently, Mellanox has a Zacks Rank #2 (Buy).
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