Programmable Logic Devices (PLD) maker Xilinx, Inc. (XLNX) posted net income of $154.4 million or $0.56 per diluted share in the first quarter of fiscal 2011, down 4% sequentially and 3% year over year.
However, the result easily beat the Zacks Consensus Estimate of $0.53 per share.
Sales of $615.5 million were up 5% sequentially and 3% year over year, within management’s guidance range of $587.9 – $611.4 million.
The better-than-expected sales were primarily due to strength from Wired Communication, Industrial, Scientific and Medical and Data Processing applications. On the other hand, the wireless business was weaker than anticipated due to non-PLD component constraints at a large customer following the Japan earthquake.
New Product sales increased 17% sequentially during the fiscal first quarter led by strong customer demand for the 40-nm Virtex-6 and Spartan-6 families as well as the 65-nm Virtex-5 family.
Margins
Gross margin declined to 63.7% from 65.0% in the year-ago quarter and 65.3% in the previous quarter, primarily due to product mix that was impacted by stronger-than-expected growth from Virtex-6 and Spartan-6 families concurrent with declines from Base and Mainstream Product families.
Operating margin decreased to 30.6% from 30.8% in the previous quarter and from 34.9% in the year-ago quarter. Operating expenses of $204 million were $2 million less than guided due to lower than expected acquisition expense and lower share-based expense.
During the quarter, Xilinx generated $238 million of cash from operations and used $14 million in capital expenditures. Xilinx paid $50 million in cash dividends and repurchased 1.9 million shares for $65.7 million.
Xilinx ended the quarter with cash, equivalents and short-term investments of $1.9 billion, almost flat with the previous quarter.
Guidance
Xilinx, which competes with Altera Corporation (ALTR), expects sales in the September quarter to be up 1% to down 3% sequentially. This implies a sales guidance of $621.7 million – $597.0 million.
Gross margin is forecasted at 63%, lower than the second quarter, primarily due to faster than anticipated ramp of Virtex-6 and Spartan-6. However, management expects gross margin to reach 64% – 66% by the December quarter.
Operating expenses in the September quarter are expected to be approximately $218 million with almost all of the increase occurring in research and development. The R&D increase is primarily related to high mask and wafer costs associated with the 28-nanometer roll out.
ALTERA CORP (ALTR): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment