Silicom Revenue Breaks Through $10 Million Milestone
Ken Nagy, CFA
On October 24, 2011, Silicom Ltd, (SILC) the provider of high-performance server and appliances networking solutions, reported financial results for its fiscal 2011 third quarter, ended September 30, 2011.
A solid third quarter by the Company resulted in quarterly record revenues across the board, operating income, net income and earnings per share.The strong results were primarily driven by growth of sales for both established and new product lines as well as increasingly diversified sales across the Company’s entire product line.
Silicom’s third quarter revenues increased nearly 36 percent year over year, breaking through the $10 million milestone, to $10.019 million, which compares to revenues of $7.380 million for the three months ended September 30, 2010.
Operating income for the third quarter increased over 44 percent, reaching the Company’s highest ever $2.242 million, mainly as a result of the revenue highs and lower total operating expenses as a percentage of revenues. The Company’s third quarter net income on a GAAP basis increased 46 percent or $664,000 to $2.104 million from net income of $1.440 million for the comparable quarter of 2010.
Based on a weighted average number of ordinary shares of 7.012 million, Basic income per ordinary shares resulted in $0.31 per share. Gross margin for the three months ended September 30, 2011 was steady at 43.6 percent compared to 43.7 percent for the third quarter, ended September 30, 2010.
For the nine months ended September 30, 2011, year over year revenues improved by over 39 percent to $28.553 million while net income on a GAAP basis increased over 55 percent or $2.082 million to $5.843 million. Gross margin for the nine months improved slightly to 43.8 percent compared to gross margin of 43.3 percent for the nine months ended September 30, 2010.
Silicom’s cash, cash equivalents, bank deposits and marketable securities totaled $47.4 million, or $6.87 per outstanding share as of September 30, 2011. This total was up $1.6 million or 3.5 percent from the end of 2010.It should be further mentioned that the Company’s cash level hit a new record reaching the highest level on record.
The Company further reported that despite the microeconomic uncertainty over the summer the momentum in the business has remained strong with its products seeing strong market traction.
Furthermore, fundamentals of industry continue to be strong and trending building on worldwide internet and data traffic which continues to grow quickly.
The Company’s winning a deal with a top tier networking giant to standardize on Silicom’s SETAC as a front-end connectivity solution for its network appliances proves beneficial for the Company and its shareholders.
The cost competitive SETAC (Server To Appliance Converter) product family, offers a distinctive growth opportunity that enables Silicom to offer a full network appliance platform solution. This new product line permits Silicom to address new market segments as well as obtain nearly unlimited potential with the its existing customer base.
The SETAC deal with the network giant is already bringing in revenue.
Along the same lines the deal has the possibility of becoming a multi-million dollar per year deal contributor to Silicom’s consolidated revenues as well as verifies the Company’s SETAC concept is becoming an accepted market trend and a solution-of-choice for the building of next-generation appliances.
Given that the Company’s products are core and critical building blocks for next generation servers and appliances, it is very possible to expect to see continued strong demand with the selling of a broader range of products to a larger number of customers resulting in Silicom’s sales exceeding the growth rate of the Company’s end market.
To view our most recent research reports and subscribe to our daily morning email alert, visit http://scr.zacks.com/. Please email scr@zacks.com with SILC as the subject to request a copy of the full research report.
Follow Zacks Small Cap Research on Twitter at Twitter.com/ZacksSmallCap
SILICOM LIMITED (SILC): 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