Xilinx, Inc. (XLNX) reported sales of $529.0 million, up 3% sequentially and up 34% year over year. New product sales increased 13% sequentially, while mainstream products decreased 4% sequentially and base products remained flat.
California-based Xilinx designs and manufactures a broad range of high-performance, high-density programmable logic devices (PLDs) for electronic equipment manufacturers.
Coming to end-markets, communication sales increased 7% sequentially driven by growth in wireless sales. Wireline sales were essentially flat for the quarter after a strong December quarter. Industrial sales decreased 4% sequentially due to an expected decline in defense sales, which were more than offset by increases in industrial, scientific and medical and test and measurement applications.
Consumer and automotive sales increased 5% sequentially fueled by strength in automotive and audio/video broadcast applications. However, sales from consumer applications declined as expected by management. Sales from data processing increased 7% sequentially driven by increases in storage which more than offset decreases in computing and data processing.
Geographically, sales from Europe were strong, recording a 25% sequential growth driven by increases in all end-markets particularly wired and wireless communications. Asia-Pacific sales increased 1% sequentially as gains from communications and storage were slightly offset by declines from consumer.
North American sales decreased 5% sequentially as sales from communication and industrial and others declined but were partially offset by strong audio/video broadcast sales. Sales from Japan declined 4% sequentially, primarily related to declines from wired communications and consumer applications.
Gross margin improved to 64.9% from 62.1% in the year-ago quarter. Operating margin improved to 29.5% from 19.8% in the year-ago quarter.
Net income came in at $148.5 million or 54 cents in the quarter. The reported net income in the quarter includes $2.8 million or 1 cent per share of restructuring charges and a tax benefit of $23.2 million or 8 cents per share primarily related to the impact of a recent favorable ruling.
Excluding these charges, EPS came in at 47 cents beating the Zacks Consensus Estimate of 45 cents.
During the quarter, Xilinx generated $104 million of cash from operations and used $11 million in capital expenditures. The company paid $44 million in cash dividends and spent $125 million on share repurchases.
Xilinx ended the quarter with cash, equivalents and short-term investments of $1.4 billion, down from $1.5 billion in the prior quarter.
For fiscal 2010, sales of $1.83 billion were almost flat with the prior year. Sales increased in wireless, defense and automotive markets but declined in all other markets. Net income came in at $357.5 million or $1.29 per share versus a net income of $361.7 million or $1.31 per share in fiscal 2009.
Guidance
Going forward, management expects to see continued strength from Virtex-5 (one of its new products) along with growth from new Virtex-6 and Spartan-6 families. Sales from all end-markets are expected to be up except data processing. Sales from all geographies are projected to grow or remain flat except Japan.
Xilinx projects sales to be up 5% – 9% sequentially. This implies a revenue guidance of $555 – $577 million.
Gross margin is forecasted at 65%, +/- a point. The wider range for the gross margin is primarily related to the variability around yields of 40, 45 nanometer product family, which is expected to ramp up sharply in the coming quarters.
The top-line has been steadily moving up after bottoming out in June 2009. Xilinx is uniquely positioned to capitalize on incremental growth opportunities offered by its leadership in 28nm products and innovative platform-based architectures.
Last week, rival Altera Corp. (ALTR) beat expectations driven by growth in top-line, which was propelled by the ramp-up of new products including 65 nanometer and 40-nanometer family.
Shares of Xilinx dipped 1.46% to close at $26.24 in after-hours trading. Earlier, shares were up 1.25% to close at $26.63 in regular trading.
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