) reported earnings per share of 46 cents in the second quarter
of fiscal 2013, easily beating the Zacks Consensus Estimate of 41
cents. However, the quarterly earnings failed to surpass the
year-ago earnings as well as the prior quarter earnings of 47
cents a share. Net income declined 5% sequentially and 2% year
over year to $123.4 million.
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
The company reported total sales of $543.9 million, down 2%
year over year and 7% sequentially, but in line with management's
guidance. The overall decline was attributable to
weaker-than-anticipated sales from industrial and Aerospace and
defense and computer and data processing, offset somewhat by
better-than-expected sales from wireless
Geographically, the company's sales were down sequentially
across all regions except Japan. New product sales increased 7%
sequentially, driven by higher sales of 28 nanometer families,
partially offset by flat 40 nanometer sales. Revenues from 28
nanometer surpassed management's target of $20 million.
Mainstream products increased 3% during the quarter, driven by
strength from the Virtex-5 products, attributable to LTE
deployment activity. Base products declined by almost 20%
sequentially, due to soft industrial, defense and communications
Sales from communications in data center increased 3%
sequentially, driven by strong wireless sales, which more than
offset expected declines in wireline. Broadcast, consumer and
automotive sales declined 15% sequentially as sales from all
categories were flat to down sequentially.
Gross margin decreased to 65.5% from 66.0% in the previous
quarter but was up from 63.9% in the year-ago quarter, primarily
due to continued focus on yield improvement and cost reduction,
which offset significant impact from customer and product mix
during the quarter. Operating margin decreased to 27.2% from
28.2% in the previous quarter and 27.9% in the year-ago quarter,
despite lower expenses.
During the quarter, Xilinx generated $197.4 million of cash
from operations and incurred $7.6 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, flat with the previous quarter. Days
sales outstanding decreased by 3 days to 35 days. Inventory
increased by $11 million sequentially to $204.0
Xilinx stated that the backlog entering into the December
quarter was down sequentially. In addition, management estimates
that continued macroeconomic uncertainty may result in
unpredictable customer ordering patterns. Sales of base and
mainstream products will likely decline. Nevertheless, Xilinx,
which competes with
), expects continued growth from new products.
Consequently, Xilinx expects sales to be down 1% to 5%
sequentially in the third quarter of fiscal 2013 and sales from
all geographies are projected to decrease.
Gross margin is forecasted around 66%, marginally up from the
September quarter, primarily due to improving customer mix.
Operating expenses in the December quarter are expected to be
approximately $224 million, including approximately $3 million of
amortization of acquisition-related intangibles.
Meanwhile, owing to the uncertain business environment, Xilinx
is taking steps to reduce headcount and lower discretionary
spending. The weak macroeconomic environment affected sales for
the September quarter and has also resulted in
lower-than-seasonal guidance for the December quarter.
The weak guidance drove a 0.56% decrease in the share price in
the aftermarket hours trading to close at $33.77. Earlier, the
stock, gained 0.65% to close at $33.96 in regular trading.
We maintain an Underperform recommendation on Xilinx in the
long run. However, we have a Zacks #3 Rank on the stock, which
translates into a short-term rating of Hold.
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XILINX INC (XLNX): Free Stock Analysis Report
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