) hit a new 52-week high of $47.76 on Sep 16, eventually closing
at $47.50. The closing share price represents a one-year return
of 35.3% and year-to-date return of 28.1%.
Xilinx is seeing demand for its 28 nanometer (nm) field
programmable gate array (FPGA) chips accelerate, which has
enabled it to surpass its archrival
). During the first quarter of 2014, sales of these products
exceeded $50.0 million, which was much better than the company's
expectations. It expects the sales of 28-nm chips to exceed $60.0
million in the second quarter of 2014.
We believe that Xilinx is going to benefit from the usage of
more FPGA chips by telecom companies in their 4G and LTE
We are also encouraged by the gross margin expansion despite
difficult revenue comps. We think that the company's continued
focus on margin expansion, cost reduction across its product
portfolio and higher yield are positive.
Moreover, Xilinx reported impressive first-quarter results
with both the bottom and top lines beating the Zacks Consensus
Estimate. Although revenues declined year over year, earnings per
share improved due to cost optimization.
The second-quarter guidance was encouraging, reflecting
recovery in the semiconductor market on the back of expected
higher spending, especially from telecom customers.
Management expressed optimism about its yet-to-be shipped
20-nm products. Xilinx confirmed that it has reached the final
stage of the design cycle for the 20-nm transition.
Xilinx also mentioned that it has extended business ties with
its foundry partner
Taiwan Semiconductor Manufacturing Co. Ltd.
) to plan for a 16-nm transition. With this, Xilinx sounded
positive about its Programmable Logic Devices market
Currently, Xilinx has a Zacks Rank #2 (Buy). Investors may
) in the technology sector which also carries a Zacks Rank #1
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