We recently reiterated our Neutral recommendation on ANADIGICS, Inc. ([stock]ANAD[/stock]). ANADIGICS is positioned in three fast-growing markets: 3G, Wi-Fi and CATV. The continued expanded high demand of wireless connectivity in a growing number of consumer devices, including smart phones, datacards, netbooks, notebooks and tablets, provide substantial opportunities for growth to ANADIGICS.
ANADIGIC currently designs chips for third-generation smartphones for Samsung, LG, Research In Motion Limited ([stock]RIMM[/stock]) and Palm, who are well positioned in the rapidly growing 3G market. The rapid growth of smartphones will continue to benefit ANADIGICS in the wireless market.
However, although fourth-quarter results beat estimates, ANADIGICS has provided a disappointing outlook for the first quarter.
ANADIGICS recently reiterated its guidance for the first quarter of 2011. The company continues to expect revenues between $ 42 million and $ 44 million, down from $ 60 million generated in the previous quarter and $ 44 million in the year-ago quarter. The current Zacks Consensus Estimate for the first quarter is $ 43 million, in line with management’s guidance.
According to the company, it hasn’t lost any significant customers but experienced soft demand in the cable and WiMAX markets, which has strained inventories. The weakness in the revenue guidance was due primarily to weakness from Asia with normal seasonality in Korea and North America.
Management expects to report a loss in the first quarter of 2011 due to softness in China related to excess inventories and continued market correction in the broadband segment. Management believes that this is a short-term inventory correction and expects growth in the second half of 2011.
Excluding one-time charges and stock-based compensation, ANADIGICS projects EPS of around $ 0.07 – $ 0.08. Earnings estimates for 2011 have declined a bit of late. We prefer to be on the sidelines as of now and, therefore, maintain our Neutra recommendation. Our recommendation is supported by a Zacks #3 Rank which translates into a short-term rating of Hold.
ANADIGICS CORP (ANAD): Free Stock Analysis Report
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