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Loss Narrows at TriQuint - Analyst Blog

Posted: 10/25/2012 2:03:00 PM
Referenced Stocks: AVGO;TQNT

TriQuint Corporation ( TQNT ) recently reported better-than-expected financial results for the third quarter of 2012.

The company posted a net loss of $11.2 million in the third quarter, improving considerably from a net loss of $13.1 million in the second quarter of 2012 and a net income of $16.6 million in the year-ago quarter.

Net loss per share came in at 7 cents compared with a net income of 9 cents in the year-ago quarter and a loss of 8 cents in the previous quarter. Excluding restructuring charges but including stock-based compensation, net loss per share came in at 2 cents, better than the Zacks Consensus Estimate of a loss of 4 cents per share. 

Revenues of $200.8 million in the third quarter of 2012 were down 7% year over year but up 13% sequentially.

The sequential growth was driven by increased demand from major smartphone customers and order strength for infrastructure and defense products.

On a segment basis, revenues from Mobile Devices (the largest of the three major markets that the company serves - Mobile Devices, Networks, and Defense and Aerospace) grew 13% sequentially. Defense and Aerospace were up 16% sequentially. Network infrastructure posted a sequential growth of 11%.

Gross margin (excludes stock-based compensation charges and certain charges associated with acquisitions) was 32.5%, down from 36.3% in the year-ago quarter but up from 27.9% in the previous quarter. The sequential growth was driven by improved product mix and utilization. 

TriQuint ended the quarter with cash and investments of $114.4 million, down from $127.3 million at the end of the previous quarter. The decrease was primarily due to higher sales volume later in the quarter, resulting in a higher accounts receivable ending balance. Inventory decreased to $154.1 million, versus $154.8 million at the end of the previous quarter.

Going forward, TriQuint, which competes with Avago Technologies Limited ( AVGO ), expects revenues between $220 million and $225 million in the fourth quarter of 2012, driven by broad based strength across all major markets.

Gross margin is projected around 30%, down from the third quarter due to planned inventory reductions. TriQuint is expected to report EPS of 1 cent - 3 cents in the fourth quarter of 2012. 

We maintain an Outperform recommendation on TriQuint. However, we have a Zacks #3 Rank on the stock, which translates into a short-term rating of Hold. 

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