Infineon Ups Fourth Quarter Outlook – Analyst Blog

Infineon Technologies AG (IFNNY) recently expressed its optimism with regard to its fourth quarter results of fiscal year 2010, expecting it to be better than its earlier anticipations issued with the third quarter results on July 28, 2010. The company is scheduled to release its fourth quarter results on November 16.

 

The company believes revenue growth in the fourth quarter will be approximately 15% compared with the high single-digit percentage expected earlier. Also, the combined segment margin result is now expected to range from 18% to 20% versus its previous expectation of one to two percentage sequential increase. The positive revision in estimates can be attributable to the company’s Wireless Solutions (WLS) division, which is experiencing quite robust smart phone sales.

 

The company, for the full fiscal year 2010, anticipates revenue growth to escalate from mid to high 40% range to approximately 50%, with combined segment result margin anticipated between the 13% and 14% range versus the low teens expected earlier.

 

Recently, Infineon has contracted to sell its WLS business to Intel Corp. (INTC) in a cash transaction valued approximately at US$1.4 billion. The sale strategically positions Infineon to concentrate on expanding its leadership in markets like automotive, industry and security technologies. Completion of the transaction is expected in the first quarter of 2011. Results for the fourth quarter and fiscal year 2010 will report WLS business as discontinued operations.

 

For the first quarter of 2011, Infineon expects its continuing operations (excluding its WLS business) to yield the same revenue growth as in the fourth quarter of 2010.

 

Infineon Technologies designs, develops, manufactures, and markets semiconductors and complete systems solutions used in a variety of microelectronic applications, including computer systems, telecommunications systems, consumer goods, automotive products, industrial automation, control systems, and chip card applications.

 

We currently maintain a Neutral recommendation on the stock.