On Jul 5, 2013, we retained our Neutral recommendation on
). On Apr 24, Xilinx posted mixed first quarter 2013 results.
Revenues declined on a year-over-year basis and missed the Zacks
Consensus Estimate. But the quarter's adjusted earnings of 47
cents were better than the year-ago level and also ahead of the
Zacks Consensus Estimate.
Xilinx delivered a positive earnings surprise in the last
quarter, with an average beat of 5.95% for the trailing four
quarters. Currently, Xilinx has a Zacks Rank #3 (Hold).
Why a Neutral Stance?
Xilinx currently dominates the Programmable Logic Device (PLD)
market with its 28 nanometer (nm) field programmable gate array
(FPGA) products. The company has introduced a broad array of 28nm
FPGA chips during fiscal 2013. The new product launches led
Xilinx to generate better-than-expected revenues from the FPGA
portfolio in the last quarter.
Management expects 28-nm FPGA revenues to grow 150.0% year over
year in fiscal 2014 based on continued ASIC and ASSP displacement
and higher usage of FPGAs in next generation wireline &
wireless networks and data centers. LTE deployments in the
communications market will drive FPGA demand leading to continued
momentum for Xilinx.
Xilinx' leadership could get affected while transitioning to
lower nodes. Though archrival Altera Corp. remained an underdog
in the 28-nm transition, the trend could reverse in the case of
20-nm or 14-nm. Both the companies are planning to launch their
20-nm products shortly.
Notably, Altera has started working on developing 14-nm FPGAs
leveraging Intel Corp.'s tri-gate transistor technology. In
response, Xilinx also announced its 16-nm plans in association
with its foundry partner Taiwan Semiconductor Company.
HEWLETT PACKARD (HPQ): Free Stock Analysis
MICRON TECH (MU): Free Stock Analysis Report
NETAPP INC (NTAP): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
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Over the last 30 days, estimates for 2013 and 2014 remained
unchanged. Hence, the Zacks Consensus Estimate for 2013 and 2014
also remains unchanged at $2.00 and $2.30 per share,
The lack of estimate revisions indicates that there are no
drivers to move the stock in either direction.
Other Stocks to Consider
Other stocks in the technology sector that are currently
performing well include
Micron Technology Inc.
). All these companies carry a Zacks Rank #2 (Buy).