Programmable Logic Devices (PLD) maker Xilinx, Inc. (XLNX) posted a net income of $126.3 million or $0.47 per diluted share in the second quarter of fiscal 2012, down 18% sequentially and 26% year over year. However, the result easily beat the Zacks Consensus Estimate of $0.44 per share.
Sales of $555.2 million were up 10% sequentially and 10% year over year, and within management’s revised guidance range of $553 million to $572 million.
Management stated that the September quarter was impacted by weaker-than-expected business conditions particularly in the Communications and Industrial and Other Categories.
Mainstream products decreased 15% sequentially and base products declined 14% sequentially. New Product sales decreased 5% sequentially during the second quarter due to declines from Virtex-5 that was impacted by decreases in Wired Communications. Notably, the decline more than offset increases in the Wireless business.
40 and 45-nanometer product sales increased sequentially, led by strong gains from Spartan-6. 28-nanometer products, particularly Kintex-7, contributed to new product sales shipping units to more than 50 customers during the quarter.
Margins
Gross margin declined to 63.9% from 65.6% in the year-ago quarter and was almost flat sequentially due primarily to favourable customer mix and product mix.
Operating margin decreased to 27.8% from 30.8% in the previous quarter and from 34.9% in the year-ago quarter.
During the quarter, Xilinx generated $199.6 million of cash from operations and used $17.7 million in capital expenditures. Xilinx paid $50.3 million in cash dividends and repurchased 4 million shares for $122 million.
Xilinx ended the quarter with cash, equivalents and short-term investments of $2.8 billion, down by almost $17 million. Day sales outstanding decreased by a day in the September quarter to 35 days.
Guidance
Xilinx, which competes with Altera Corporation (ALTR), expects sales from Virtex-6 and Spartan-6 families to increase sequentially. Sales from Communications are projected to be down sequentially with wireless declines will offset an increase from Wired Communications.
Xilinx expects sales to be down 3% to down 8% sequentially while sales from all geographies are expected to be down.
Gross margin is forecasted at 64%, as yield improvements and cost reduction efforts offset strong growth in sales of new product. Operating expenses in the December quarter are expected to be approximately $203 million, including approximately $2 million of amortization of acquisition-related intangibles.
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