TriQuint Semiconductor, Inc (TQNT) reported revenues of $237.0 million in the third quarter of 2010, up 37% year over year and up 14% sequentially, which marginally surpassed the Zacks Consensus Estimate of $236 million. However, the reported number was slightly short of management’s revised expectation of $238 million.
TriQuint is an original equipment manufacturer of semiconductor communication integrated circuits.
Networks continued to enjoy a strong rebound from the lows of 2009 as revenues jumped 61% year over year. Mobile Devices also recorded robust growth as revenues grew 37% year over year and 28% sequentially. Defense revenue increased 3% year over year.
In particular, revenues from Mobile Devices (the largest of the three major markets that the company serves – Mobile Devices, Networks, and Defense and Aerospace) accounted for 68% of total revenues and grew 28% fueled by strong demand for smartphones.
The RF section has become more complex within smartphones, with requirements for voice, multiple data bands, Wi-Fi, and GPS. Consumer demand for wireless broadband is fueling rapid growth in smartphones, bringing four to six times the RF dollar content per smartphone compared to a voice-only phone.
Networks, accounting for 23% of total revenues, was flat sequentially driven by growth in optimal driver amplifiers and amplifiers used in Fiber-to-the-Home or FTTH which was offset by short-term softness in base stations largely due to the timing of demand in India. 40-gigabit optical drivers are used in metro area upgrades to support the increasing data traffic of streaming video for social networking.
Defense and Aerospace revenues accounted for 9% of total revenues and were down sequentially as expected by TriQuint.
Foxconn and Samsung accounted for more than 10% of total revenues each. Book-to-bill ratio for the quarter was 1.06 driven by healthy growth in the mobile devices market, but was offset by poor performance in the fluctuating defense and aerospace market.
Gross margin (excludes stock-based compensation charges and certain charges associated with acquisitions) improved to 42.3% from 35% in the year-ago quarter but was flat sequentially. Including these charges, gross margin came in at 41.3%. The improvement in gross margin was due to strong factory utilization partially offset by higher mix of mobile devices revenue.
TriQuint posted a net income of $110.9 million or 68 cents per share in the third quarter of 2010 compared to a net income of $22.5 million or 14 cents in the previous quarter and $10.5 million or 7 cents in the year-ago quarter. The net income reported in the quarter benefited from an income tax gain of $72.0 million. Excluding restructuring charges but including stock-based compensation, earnings per share came in at 25 cents, easily beating the Zacks Consensus Estimate of 22 cents.
During the quarter, TriQuint generated $39.1 million of cash from operations and used $31.7 million in capital expenditures. TriQuint ended the quarter with cash and investments of $187.1 million, up from $175.1 million at the end of the previous quarter.
Going forward, TriQuint expects its top-line to grow 20% in 2011. For the fourth quarter, TriQuint expects revenues between $245 million and $255 million, slightly ahead of the Zacks Consensus Estimate of $244 million. Sales of smartphones are expected to increase by more than 55% this year driving solid growth in the mobile devices segment. Gross margin is estimated between 41% and 42%.
Excluding stock-based compensation charges and restructuring charges, TriQuint forecasts EPS of 26 – 28 cents. Cash is expected to grow modestly with strong earnings partially offset by increased capital expenditures and working capital.
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