Chipmaker Xilinx, Inc. (XLNX) recently increased its quarterly cash dividend to 19 cents per share from 16 cents per share. The dividend will be paid on June 8, 2011 to all stockholders of record at the close of business on May 18, 2011.  

In addition, Xilinx reiterated its sales guidance for the March quarter.  Xilinx expects sales to be flat to up 5% sequentially. This guidance implies sales of $567.0 – $595.4 million for the quarter.  Xilinx had earlier forecast gross margin to come around 65%, give or take one percentage point.

The guidance assumes that the company’s shipments to customers in Japan will not  be affected by the recent earthquake there and the company is still in the process of assessing the situation in Japan.

Xilinx posted a net income of $152.3 million or 58 cents per share in the third quarter of fiscal 2011 compared twith a net income of $171 million or 65 cents per share in the second quarter of fiscal 2011. Results however beat the Zacks Consensus Estimate of 52 cents. Net income jumped 42% on a year-over-year basis.

Sales of $567.0 million were down 8% sequentially but up 10% year over year, and within management’s revised sales guidance between $563.9 million – $576.3 million. The reported figure missed the Zacks Consensus Estimate of $572 million.

Sales declined during the quarter primarily due to weaker-than-expected wireless communications sales to customers in Europe and North America. New product sales decreased 10% sequentially in the December quarter primarily due to decline in Virtex-5 sales. Sales from mainstream and base products both declined sequentially.

Earlier in the month, Xilinx’ closest rival Altera Corporation (ALTR) reiterated its sales guidance for the first quarter of 2011. Altera continues to estimate a sequential decline of 1% to 5% in the first quarter. The estimated decline in sales implies a sales guidance of $527.8 million – $549.9 million.

We believe Altera is well ahead of Xilinx when it comes to new product introduction at smaller geometries. This has eroded the market share of Xilinx in recent times.

We continue to maintain a Neutral recommendation on Xilinx, supported by a Zacks #3 Rank.

 
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