NXP Semiconductors (NXPI) Earnings Decline Y-o-Y in Q4

NXP Semiconductors NV NXPI reported fourth-quarter 2016 earnings per share of 37 cents, which decreased significantly from $3.56 per share reported in the year-ago quarter.

Quarter Details

NXP Semiconductors' revenues grew 51.9% year over year to $2.440 billion and beat the Zacks Consensus Estimate of $2.439 billion by a slight margin.

Revenues were boosted by 51.2% increase in Product revenues and 89.7% increase in Corporate & Other revenues on a year-over-year basis. Also, an increase in High Performance Mixed Signal (HPMS) segment revenues (up 71% on a year-over-year basis) positively impacted the quarter's results.

NXP Semiconductors' reported gross margin expanded from 38.5% on a year-over-year basis to 48.7%, primarily due to a higher revenue base. Non-GAAP gross profit margin during the quarter was 51.1% compared with 50.2% reported in the year-ago quarter.

The company's operating margin decreased to 7.1% from 63.1% reported in the year-ago quarter. The year-over-year decline was primarily due to higher operating expenses (up 17.7% year over year). On a non-GAAP basis, operating margin was 29.3% compared with 27% reported in the year-ago period. The increase was mainly due to lower operating expenses as a percentage of revenues. Operating expenses, as a percentage of revenues, decreased to 24.7% from 29.8% reported in the year-ago quarter.

The company's reported net income attributable to shareholders came in at $128 million compared with $972 million reported in the year-ago quarter.

NXP Semiconductors exited the quarter with cash and cash equivalents of approximately $1.89 billion compared with $1.57 billion reported in the previous quarter. Receivables were $1.03 billion at the end of the quarter compared with $1.16 billion reported in the previous quarter. NXP Semiconductors' balance sheet has long-term debt of $8.77 billion compared with $8.76 billion reported in the previous quarter.

The company reported cash flow from operations of $737 million during the quarter. Free cash flow was $606 million. During the quarter, NXP Semiconductors repurchased approximately 0.6 million shares for $62 million.

Share Price

Over the past one year, NXP Semiconductors has returned 34.3% compared with the Zacks categorized Semiconductor-Analog & Mixed industry's gain of 45.3%.

Our Take

NXP Semiconductors, a global semiconductor company, is known for its automotive and chip identification business and has seen massive growth in the portable device segment over the past year.

The company's year-over-year top line comparisons were favorable but the bottom line declined on a year-over-year basis. For the first quarter of fiscal 2017, NXP Semiconductors did not provide any guidance due to its pending acquisition by QUALCOMM Incorporated QCOM .

Continued strong adoption of tablets and smartphones, automotive electronics and the emergence of the new category of wearables boosted the demand for processing and sensing devices that run them.

With the acquisition of Freescale Semiconductor, NXP Semiconductors has now become the world's leading provider of automotive semiconductor solutions and general purpose microcontroller products.

Nonetheless, macroeconomic weakness, competition from Xilinx Inc. XLNX and Lattice Semiconductor Corp. LSCC , consolidation in the telecom market, declining margins and volatility in the semiconductor market remain headwinds.

Currently, NXP Semiconductors has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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QUALCOMM Incorporated (QCOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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