Xilinx Beats, Guidance Weak - Analyst Blog

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Xilinx Inc. (XLNX) recently posted a net income of $129.8 or $0.47 per diluted share in the first quarter of fiscal 2012, up from a net income of $122.4 million or $0.44 per diluted share in the previous quarter, but down from $154.4 million or $0.56 per diluted share in the year-ago quarter. The quarter's result easily beats the Zacks Consensus Estimate of $0.45 per share.

California-based Xilinx Inc. is engaged in designing and manufacturing a broad range of high-performance, high-density programmable logic devices (PLDs), such as field-programmable gate arrays (FPGAs) and complex-programmable logic devices (CPLDs).

Total sales were $582.8 million, down 5% year over year, but up 4% sequentially, in line with management's guidance. 


The growth was driven by strength in Asia Pacific, particularly in communications applications. As expected, North America was weak due to softness in defense and industrial, scientific and medical. 

New product sales increased 31% sequentially driven by sales increases from 28-, 40-, 45-nanometer products. Sales of 28-nanometer products grew significantly in the quarter, surpassing management's target of $10 million. The company now expects sales to exceed $20 million in the September quarter. Mainstream products declined 4% and base products increased 4% sequentially, but down 16% year over year. Base products declined 5% and 10% during the quarter and on a year-over-year basis, respectively.

Margins

Gross margin decreased to 66.0% from 66.4% in the prior quarter but increased from 63.7% in the year-ago quarter, primarily due to a continued focus on yield improvement and cost reduction.

Operating margin increased to 28.2% from 26.4% in the previous quarter,  but decreased from  30.6% in the year-ago quarter. 

During the quarter, Xilinx generated $162.9 million of cash from operations and used $8 million in capital expenditures. Xilinx paid $58 million in cash dividends. 

Xilinx ended the quarter with cash, equivalents and short-term investments of $1.7 billion, down from $1.9 billion at the end of the previous quarter. Days sales outstanding increased by 5 days to 35 days. Inventory declined by $12 million sequentially. 

Guidance

Xilinx stated that the backlog entering into the September quarter was down sequentially due to the completion of a last time buy program by a customer, which negatively impacted the top-line by $25 million. Additionally, management continues to be wary of uncertain macro environment. Nevertheless, management expects growth from new products. Xilinx, which competes with Altera Corporation (ALTR), expects strong growth from 28-nanometer and 40-nanometer product families in fiscal 2013.  Consequently, Xilinx expects sales to be down 4% to 8% sequentially in the second quarter of fiscal 2013 and sales from all geographies are projected to decrease.  

Gross margin is forecasted around 66%, consistent with the June quarter as Xilinx continues to make progress on margin improvement projects across its product portfolio with particular emphasis on new product margin improvement. Operating expenses in the September quarter are expected to be approximately $220 million, including approximately $2 million of amortization of acquisition-related intangibles. 

The weak guidance drove a 0.97% decrease in the share price in the after market hours trading to close at $31.70. Earlier, the stock, gained 3.63% to close at $32.01 in regular trading.

Xilinx Inc. ( XLNX ) recently posted a net income of $129.8 or $0.47 per diluted share in the first quarter of fiscal 2012, up from a net income of $122.4 million or $0.44 per diluted share in the previous quarter, but down from $154.4 million or $0.56 per diluted share in the year-ago quarter. The quarter's result easily beats the Zacks Consensus Estimate of $0.45 per share.

 

California-based Xilinx Inc. is engaged in designing and manufacturing a broad range of high-performance, high-density programmable logic devices (PLDs), such as field-programmable gate arrays (FPGAs) and complex-programmable logic devices (CPLDs).

 

Total sales were $582.8 million, down 5% year over year, but up 4% sequentially, in line with management's guidance. The growth was driven by strength in Asia Pacific, particularly in communications applications. As expected, North America was weak due to softness in defense and industrial, scientific and medical. 

 

New product sales increased 31% sequentially driven by sales increases from 28-, 40-, 45-nanometer products. Sales of 28-nanometer products grew significantly in the quarter, surpassing management's target of $10 million. The company now expects sales to exceed $20 million in the September quarter. Mainstream products declined 4% and base products increased 4% sequentially, but down 16% year over year. Base products declined 5% and 10% during the quarter and on a year-over-year basis, respectively.

 

Margins

 

Gross margin decreased to 66.0% from 66.4% in the prior quarter but increased from 63.7% in the year-ago quarter, primarily due to a continued focus on yield improvement and cost reduction. Operating margin increased to 28.2% from 26.4% in the previous quarter,  but decreased from  30.6% in the year-ago quarter. 

 

During the quarter, Xilinx generated $162.9 million of cash from operations and used $8 million in capital expenditures. Xilinx paid $58 million in cash dividends. Xilinx ended the quarter with cash, equivalents and short-term investments of $1.7 billion, down from $1.9 billion at the end of the previous quarter. Days sales outstanding increased by 5 days to 35 days. Inventory declined by $12 million sequentially. 

 

Guidance

 

Xilinx stated that the backlog entering into the September quarter was down sequentially due to the completion of a buy program by a customer, which negatively impacted the top line by $25 million. Additionally, management continues to be wary of uncertain macro environment. Nevertheless, management expects growth from new products. Xilinx, which competes with Altera Corporation ( ALTR ), expects strong growth from 28-nanometer and 40-nanometer product families in fiscal 2013.  Consequently, Xilinx expects sales to be down 4% to 8% sequentially in the second quarter of fiscal 2013 and sales from all geographies are projected to decrease.  

 

Gross margin is forecasted around 66%, consistent with the June quarter as Xilinx continues to make progress on margin improvement projects across its product portfolio with particular emphasis on new product margin improvement. Operating expenses in the September quarter are expected to be approximately $220 million, including approximately $2 million of amortization of acquisition-related intangibles. 

 

The weak guidance drove a 0.97% decrease in the share price in the after market hours trading to close at $31.70. Earlier, the stock, gained 3.63% to close at $32.01 in regular trading.


 
ALTERA CORP (ALTR): Free Stock Analysis Report
 
XILINX INC (XLNX): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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