TriQuint Semiconductor, Inc. (TQNT) reported revenues of $180.8 million in the first quarter of 2010, up 52% year over year driven by broad-based growth across all markets. On a sequential basis, revenues were down 6.5% sequentially.
TriQuint is an original equipment manufacturer of semiconductor communication integrated circuits. The company specifically targets the wireless handset segment, infrastructure networks and defense markets.
The key underlying factor for the reported quarter was a rebounding infrastructure market and strong demand for smartphones.
In particular, revenues from Mobile Devices (the largest of the three major markets that the company serves – Mobile Devices, Networks, and Defense and Aerospace) grew 63% as this segment continues to benefit from the increasing strong demand for smartphones and expansion in content required for 3G data. Smartphones account for 65% of total Mobile Devices revenue. Revenues from 3G grew 85% year over year driven by expansion of 3G to new mobile devices such as data cards and electronic readers.
Networks grew 42% year over year and 27% sequentially and above management’s expectations. The recovery was broad based in the networks market as growth came from all major markets such as base stations and transport. Management expects that increased spending in North American infrastructure will offset some softening in China. New products that support video data and voice, data and voice to home are expected to push the strong momentum in the second half of 2010.
Defense and Aerospace revenues were up 35% year over year. Direct R&D investment from government and industry partners were up 37% year over year and radar was up 70%. Foxconn was the only customer, which accounted for more than 10% of total revenues.
Moving onto margins, gross margin improved to 39% from 38.4% in the previous quarter and 21% in the year-ago quarter. This excludes stock-based compensation charges and certain charges associated with acquisitions. Including stock-based compensation expense, gross margin came in at 38.5%.
The improvement in gross margin was due to improved revenue growth in the high margin networks segment and solid factory utilization. Factory utilization was better than expected due to better-than-seasonal revenues and expected strong revenue growth into the second quarter.
Net income for the first quarter of 2010 was $13.7 million or 9 cents per share compared to a net income of $17.5 million or 11 cents per share in the previous quarter and a net loss of $15.7 million or a loss of 11 cents per share in the year-ago quarter.
Excluding restructuring charges, earnings per share came in at 10 cents, easily beating the Zacks Consensus Estimate of 8 cents.
During the quarter, TriQuint generated $12.1 million of cash from operations and used $12.9 million in capital expenditures.
The company ended the quarter with cash and investments of $157.6 million, up from $153.9 million at the end of the previous quarter.
Outlook for Second Quarter
Going forward, management expects revenues between $200 million and $210 million in the second quarter, up from $180.8 million in the first quarter. Management was upbeat about the broad rebound in the networks market and continued strong demand for smartphones.
Sales of Smartphones are expected to increase by more than 20% this year and require four to six times the radio frequency (RF) content per device compared to voice-only phones. The RF industry is enjoying a rising tide of demand with 3G content expansion, healthy smartphone unit growth and a rebounding infrastructure market.
Growth from Networks market is going to be strong driving a gross margin of 40% (excluding stock-based compensation and restructuring charges if any). Excluding stock-based compensation charges and restructuring charges, EPS is forecasted at 15 cents.
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