ANADIGICS, Inc. (ANAD) reported net sales of $61.3 million in the third quarter of 2010, up 18.6% sequentially and 67% year over year. The results beat management’s guidance of $57.5 million.
The better-than-expected revenue growth during the quarter was driven by strength in the wireless business.
Coming to revenue mix, wireless revenues accounted for 74% of total revenue while broadband accounted for the remaining 26%. Wireless sales of $45.2 million grew 18% sequentially. Broadband revenue of $16.1 million grew 20% sequentially driven by double-digit increases in cable infrastructure and WiMAX. ANADIGICS estimates cable infrastructure and mobile WiMAX market to grow at an annual compounded growth rate of 14% and 73% respectively from 2009 to 2014.
The top customers for the quarter comprise Cisco (CSCO), LGE, Research In Motion Limited (RIMM), Samsung, World Peace and ZTE. The strategic initiatives of the company are maintaining profitable growth, leveraging operations and the ongoing production of superior products, which will enable ANADIGICS to capitalize on the fast growing 3G and 4G markets.
The demand for the company’s products is being driven by the increasing need for greater bandwidth in the 3G market and roll-out of both WiMAX and LTE networks in the 4G markets. In September, ANADIGICS began production of the Samsung Epic smartphone.
Gross margin came in at 36.2%, up from 35.6% in the previous quarter. Fab utilization was in the low-70s, up from the mid-60s in the previous quarter. Net income for the third quarter was $2.3 million or 3 cents per share compared to a net income of $0.8 million, or $0.01 per share in the previous quarter. Excluding one-time charges, but including stock-based compensation expense, net loss came in at $0.03 per share, better than the Zacks Consensus Estimate of a $0.01 per share.
During the quarter, ANADIGICS used $5 million of cash for operations and used $1.4 million for capital expenditures. As of October 3, 2010, the company had cash and cash equivalents of $87.0 million, up from $83.0 million at the end of the previous quarter.
Going forward, ANADIGICS projects sales of around $57 million in the fourth quarter of 2010, down from $61.3 million reported in the previous quarter. The decline is due to a pause in orders caused by inventory rebalancing by most broadband customers following the robust 20% sequential growth reported in the third quarter.
Broadband revenue is projected to decline 25% sequentially. Gross margin is estimated to improve. ANADIGICS expects to report an EPS of 3 cents in the fourth quarter. Excluding one-time charges and stock-based compensation, EPS is projected at 6 cents.
ANADIGICS expects to exit 2010 with more than $100 million in cash, cash equivalents, and short and long term marketable securities on anticipated positive cash generation in the fourth quarter.
ANADIGICS expects 2011 to be a positive year for the company fueled by strong market unit growth based on solid strength for wireless handsets.
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