Tuesday, Xilinx, Inc. (XLNX) raised its third quarter sales and gross margin outlook, citing broad-based strength across all end market categories and geographies.
The San Jose, California-based maker of programmable chips Xilinx now expects third quarter sales to be 16% to 20% higher sequentially. The company's earlier guidance was for sales to increase in the range of 6% to 10% sequentially. Along with higher sales, the company expects third-quarter gross margin at 64%, which is an upward revision from the prior guidance range of 62% to 63%.
On average, 19 analysts polled by Thomson Reuters estimate earnings of $0.28 per share for the quarter on revenues of $450.58 million. Analysts' estimates typically exclude special items.
For its second quarter, Xilinix had reported a decline in profit by 21% from last year, hurt by lower revenues and gross margins. The company reported a second-quarter net income of $64.0 million or $0.23 per share, compared to $81.1 million or $0.29 per share in the year-ago quarter. Second-quarter results included restructuring charges of $5.9 million or $0.02 per share.
Net revenues for the second quarter had fallen by 14% to $414.95 million from $483.54 million in the same quarter last year. However, net revenues for the second quarter grew 10% sequentially. Xilinix's new product sales increased 36% sequentially during the second quarter, driven primarily by the Virtex-5 and Spartan-3 FPGA families. Mainstream products increased 4% due to strong growth from Virtex-4 family and base products. Base products, which consist of the company's oldest products, experienced a slight sequential decline of 1% during the second quarter.
While discussing second-quarter results, Xilinix revealed that bookings in the second quarter were healthy, but turns revenue was not, as orders were converted to backlog for the third quarter. Wim Roelandts, chief executive officer of Xilinix, said, "We believe that some advanced ordering or change in customer behavior is probably related to concerns over increasing lead times and back-end capacity constraints."
The company also noted in the conference call that the decline in new product growth witnessed in the second quarter was due to decline in Virtex-II Pro revenue from a single customer, which would be avoided in the third quarter. Xilinix said it expects Virtex-II Pro to resume growth in the third quarter.
During the second quarter earnings call, the company also expressed hope that it is overcoming the supply constraints it has been suffering since the first quarter. "While delinquencies on a few parts remain, by the end of the December quarter, we believe that inventory will largely be at full safety stock levels," the company said.
Xilinix is expected to report its third-quarter results after the market closes on December 7, 2009.
XLNX is gaining $0.12 or 0.52%, and is trading at $23.36 on a volume of 23 thousand shares on the Nasdaq.
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