Programmable chip maker Xilinx Inc. (XLNX) said Wednesday after the markets closed that its third quarter profit fell 10% from last year, when results were boosted by a hefty gain from the early extinguishment of convertible debentures. However, the company's quarterly earnings per share came in above analysts' expectations as did its quarterly revenue.
The San Jose, California-based company reported net income for the third quarter of $106.9 million or $0.38 per share, compared to $119.4 million or $0.44 per share for the year-ago quarter.
The latest quarter results include restructuring charges of $5.5 million, or $0.02 per share. The year-ago quarter results included a $58.3 million pre-tax gain from the early extinguishment of convertible debentures and a $19.5 million pre-tax impairment charge on investments.
On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.35 per share for the third quarter. Analysts' estimates typically exclude special items.
Gross margin for the third quarter improved to 64.1% from 63.9% a year earlier. Operating profit for the quarter increased 14% to $136.6 million from $119.6 million in the prior year quarter.
Net revenues for the third quarter rose 12% to $513.35 million from $458.39 million in the same quarter last year, driven by strength from all end markets and geographic regions. Third quarter net revenues grew 24% sequentially. Seventeen analysts had a consensus revenue estimate of $491.67 million for the third quarter.
The company noted that new product sales increased 32% sequentially during the quarter due mainly to strong growth from the Virtex-5 and Spartan-3 FPGA families.
"It was a record-setting quarter for Xilinx," said Moshe Gavrielov, Xilinx President and Chief Executive Officer. "In addition to record total sales, Xilinx's Virtex-5 family comfortably surpassed $100 million in quarterly sales—more than any other FPGA product in history. Sales strength from this family was driven by Communications, Industrial and Other and Data Processing."
Last month, Xilinx had raised its third quarter sales and gross margin outlook, citing broad-based strength across all end market categories and geographies. The company expected third quarter revenue to be up 16% to 20% sequentially and gross margin for the quarter at 64%.
The company's North America revenue rose 17% year-over-year and 25% sequentially, while Asia Pacific revenue increased 18% from last year and grew 27% from the previous quarter and Europe revenue increased 4% year-over-year and rose 19% sequentially. Japan revenue fell 7% from a year earlier but climbed 17% from the prior quarter.
For the first nine months of the fiscal year, the company reported net income of $209.0 million or $0.75 per share, compared to $283.7 million or $1.02 per share for the same period last year.
Net revenue for the nine-month period fell to $1.30 billion from $1.43 billion in the prior year period.
Xilinx declared a quarterly cash dividend of $0.16 per share, payable on March 3 to all stockholders of record on February 10.
Looking forward, the company said it expects fourth quarter revenue to be up 3% sequentially to down 1% sequentially, implying fourth quarter revenue of $508.22 million to $528.75 million. Analysts currently expect the company to post revenue of $492.79 million for the fourth quarter.
The company said it expects fourth quarter gross margin to be in the range of 64% to 65%.
Chip makers have suffered as the economic downturn reduced demand for personal computers, mobile phones and other electronics over the last year. However, the market is currently experiencing a slight improvement in demand.
Last week, Intel Corp. (INTC) reported a 875% jump in fourth quarter profit, helped by higher revenue and improved margins amid a strong rebound in the global PC market.
Xilinx shares, which have traded in a range of $15.00 to $25.62 over the past year, closed Wednesday's regular trading session at $23.94, up 6 cents but lost 20 cents in after hours trading.
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