Infineon Technologies AG (IFNNY) reported fourth-quarter earnings per share of 4 cents, ahead of Zacks Consensus Estimate of a loss of 46 cents.
Infineon’s revenues in the fourth quarter were €855 million, a strong increase of 12%, compared to the third quarter, but a decline of 18% year over year. The company’s quarterly combined Segment Result was €52 million, a significant improvement, compared to break-even in the third quarter. Income from continuing operations increased to €24 million, up from a loss from continuing operations of €26 million in the prior quarter. Net income was also positive at €14 million, compared to a net loss of €23 million in the third quarter.
The sequential increase in revenues reflects growth in all of the company’s four operating segments, driven by the economic recovery and improved demand in the supply chain as well as at end customers. All of the company’s four operating segments achieved positive Segment Result. Higher sales levels, continued tight cost control, and higher factory loading were the main drivers of the earnings improvement, which were, however, partially offset by the weaker U.S. dollar against the Euro.
For the fourth quarter, income from continuing operations improved significantly on a sequential basis and was €24 million, with basic and diluted earnings per share from continuing operations of €0.03. For the third quarter, net loss from continuing operations was €26 million, and basic and diluted loss per share from continuing operations was €0.03.
Infineon reported a loss from discontinued operations, net of income taxes, of €10 million for the fourth quarter. Net income of the Wireline Communications (WLC) business was also included in this amount, which was classified as discontinued operations in the company’s consolidated financial statements for the entire 2009 fiscal year and prior periods, reflecting the sale of this business to Lantiq, affiliates of Golden Gate Private Equity Inc.
For the fourth quarter, Infineon’s free cash flow from continuing operations was €151 million, compared to free cash flow from continuing operations of €143 million in the third quarter. The sequential increase in free cash flow was driven by the improvement of the operating results as well as ongoing tight working capital management and low capital expenditures (CapEx). CapEx, including capitalized intangible assets, were €40 million in the fourth quarter, compared to €25 million in the third quarter.
Infineon’s gross cash position increased to €1,507 million as of September 30, 2009, compared to €883 million at the end of the fiscal 2008, despite voluntary repurchases and redemption of the 2010 exchangeable and convertible notes, including the voluntary early final repayment of the exchangeable bonds and repayments of other debt. In total, during the 2009 fiscal year, total short-term and long-term debt decreased by €320 million compared to the end of the 2008 fiscal year, resulting in a net cash position of €657 million as of September 30, 2009. This compares to a net debt position of €287 million at the end of the 2008 fiscal year.
Infineon focuses on the three central challenges facing modern society: Energy Efficiency, Communications and Security and offers semiconductors and system solutions for automotive and industrial electronics, chip card and security applications as well as applications in communications.
We currently have a neutral recommendation on IFNNY.
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