), a world-leading manufacturer of high-performance, high-density
programmable logic devices (PLDs), recently declared that it has
acquired PetaLogix, a supplier of embedded Linux solutions. The
company will now be able to offer the best in class, improved and
modified Linux solutions to its clients with the help of
PetaLogix's advanced PetaLinux technology. However, the financial
terms and conditions of the agreement were not unveiled.
According to management, Xilinx shall now be able to establish
itself more firmly in the vertical market through this venture,
which will also substantially strengthen the company's position in
the embedded market. PetaLogix is largely responsible for
augmenting the demand of Xilinx's programmable techniques in the
embedded market. Previously, PetaLogix was distributing Linux
solutions for various processors such as MicroBlaze and PowerPC and
now with the acquisition, it will provide Linux solutions and
techniques to the Zynq-7000 All Programmable SoC.
Earlier, in the first quarter of fiscal 2013, the company's
total sales amounted to $582.8 million, down 5% year over year, but
up 4% sequentially, in line with management's guidance. The
sequential growth was led by strength in the Asia Pacific region,
particularly in communications applications. As expected, North
America was weak due to softness in defense and industrial,
scientific and medical. 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.
Earnings estimates for the company have declined significantly
following a disappointing guidance for the second quarter of 2013,
offsetting the better-than-expected results in the reported
quarter. The company also stated that the backlog entering into the
September quarter declined sequentially, which adversely affected
the top line by $25 million. Consequently, management is highly
cautious about the prevailing clouded fiscal scenario.
Since the company pertains to an industry where ominous
competition is prevalent, it should stay wary of big players such
Lattice Semiconductor Corporation
) as it traverses through 2012.
The current Zacks Consensus EPS Estimates for Xilinx are 41
cents and $1.81 for the second quarter of fiscal 2013 and for the
full year of fiscal 2013, respectively. The company currently
carries a Zacks #3 Rank, which denotes a short-term (1-3 months)
'Hold' rating. We currently maintain an 'Underperform'
recommendation on the stock.
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