For Immediate Release
Chicago, IL – February 8, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Time Warner Cable Inc. (TWC), Clearwire LLC (CLWR), Sprint Nextel Corp. (S), Microchip Technologies Incorporated (MCHP) and Silicon Storage Technology, Inc. (SSTI).
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Here are highlights from Friday’s Analyst Blog:
Time Warner Cable to Ramp WiMAX
Time Warner Cable Inc. (TWC) has decided to speed up its investment in the next-generation (4G) WiMAX venture in 2010. From December 2009, the company has started offering WIMAX services in Dallas, and parts of North Carolina and Hawaii.
Under the brand name of “Road Runner Mobile,” this super-fast mobile broadband network supports Internet speed of 6 Mbps with a monthly fee between $40 and $80 for customers with at least one other Time Warner Cable service. This service provides its subscribers the convenience of mobility so that the customers can enjoy the WiMAX services on their devices anywhere they go within their service circle.
Time Warner Cable utilizes the nationwide WiMAX network infrastructure being set up by Clearwire LLC (CLWR). Through WIMAX, the company had also planned to add new mobile services in the future, such as the ability to program a DVR from a mobile device and take the video content along while moving. Management announced that the company is working with Clearwire and Sprint Nextel Corp. (S) to develop a 4G wireless voice product for WiMAX network.
We believe early entry into 4G mobile broadband market will be incrementally positive for the company. Time Warner Cable, the second largest cable MSO in the U.S., will now be able to effectively diversify into phone and Internet services industry with next-generation state-of-the-art technology.
Microchip Demonstrates Growth
Microchip Technologies Incorporated (MCHP) reported net sales of $250.1 million in the third quarter of fiscal 2010, up approximately 10.3% sequentially and up 30.1% year-over-year.
Revenues from all three product lines — Microcontrollers, Analog and Serial EEPROMs — grew in the quarter. The Microcontroller business grew 10% sequentially and up 30% year over year. Analog business was up 14.1% sequentially and up 40% year over year. Growth was especially strong in the linear, interface and safety and security product lines. Serial EEPROM memory products grew 9.8% sequentially.
On a geographic basis, Asia accounted for 52.3% of total sales in the December quarter. Americas were 23.7% of sales, and Europe was 24% of sales. Revenue in the Americas was up 6.1% sequentially. Europe was up 10.2% and Asia was up 12.4%.
Gross margin came in at 59% compared to 55.5% in the September quarter. The increase in gross profit margin was driven by efficiency in production activities and continued cost reduction efforts by the management. Operating expenses came in at 26.2% of the sales, down from 27.7% in the prior quarter.
Net income came in at $70.1 million or 38 cents per share compared to a net income of $53.2 million or 29 cents per share in the prior quarter. This easily beats the Zacks Consensus Estimate of 29 cents.
The results beat management’s revised guidance provided in December. During the quarter, Microchip generated $89.4 million of cash from operating activities and used $18.7 million in capital expenditures. Microchip paid $62.5 million in dividends.
Going forward, management expects revenues between $257.5 million and $267.5 million in the fourth quarter of 2010. Gross margin is projected between 59.75% and 60.25%, up from the third quarter as the company continues to see the benefits from increased production levels in factories in response to improving business conditions. Microchip expects to target a gross margin of 61.6% by the end of fiscal 2011.
Operating expenses are estimated to be 26.2% of total sales. Earnings per share are projected at 39 cents – 41 cents assuming a diluted share count of 187.2 million – 187.6 million.
Additionally, Microchip announced today that it will acquire Silicon Storage Technology, Inc. (SSTI) for $2.85 per share in cash or about $275 million in cash. The acquisition is expected to close by the second quarter of calendar 2010. Silicon Storage is a global leader in embedded flash technology and the licensing of these technologies. Silicon Storage has several other businesses which include serial, parallel and specialty flash memories.
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