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Xilinx Conflates with Barco Silex - Analyst Blog

Posted: 9/10/2012 12:34:00 PM
Referenced Stocks: ALTR;LSCC;XLNX

Leading manufacturer of a high-performance, high-density programmable logic device (PLDs) Xilinx, Inc. ( XLNX ) recently declared its integration with Barco Silex, a Certified Xilinx Alliance Program Member at IBC 2012. The companies will be jointly involved in augmenting the overall video-based IP solutions process through introducing a range of all programmable solutions and design services.

Under the collaboration, Xilinxand Barco Silex will be engaged in controlling the company's All Programmable FPGAs and SoCs through assembling various hardware-validated IP solutions, reference designs and several systems integration services. In addition, with the launch of the latest services, the broadcast equipment OEMs including video over IP solutions in their product portfolio will be able to improve their overall product offerings. Management stated that, these latest services will be extremely advantageous for manufacturers who would improve their IP video solutions.     

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 fiscal 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 as Lattice Semiconductor Corporation ( LSCC ) and Altera Corp. ( ALTR ) 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 estimates represent a year-over-year growth of (12.8%) for the fiscal second quarter and (6.7%) for fiscal 2013.  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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