Semiconductor company International Rectifier Corp. (IRF) on Monday lowered its second-quarter revenue outlook, citing lower demand in China and Europe, weakness in computing end market and manufacturing related delays.
The company noted that revenues in the ongoing third quarter are trending "modestly stronger" than the second quarter, while gross margin is projected to decline.
The El Segundo, California-based company currently forecasts revenue for the second quarter ended December 25, 2011, between $229 million and $230 million, down from the prior guidance given in early November for revenue in a range of $240 million and $270 million.
On average, eight analysts polled by Thomson Reuters expect the company to report revenues of $253.49 million.
International Rectifier noted that second-quarter revenue came in below expectations due to lower demand in China, particularly in the appliance end market, in addition to lower demand in Europe among industrial and automotive customers, weakness in the computing end market due to the recent flooding in Thailand, and manufacturing related delays in the HiRel business unit.
The company now projects second-quarter gross margin of about 35.5 percent, compared to the prior forecast for gross margin in a range of 34 to 36 percent.
During the second quarter, International Rectifier managed to reduce its channel inventory value by about 15 percent. However, the company noted that its decision not to pursue highly discounted spot market business, in addition to lower than expected sales in the quarter, led to an about 10 percent increase in internal inventory value.
The company plans to announce its second-quarter results on Thursday, February 2, 2012.
Looking ahead, International Rectifier said that initial indications showed revenues for the third quarter are trending "modestly stronger" than the second quarter, while gross margin is projected to decline by about 4 percentage points. Analysts have a consensus revenue estimate for the quarter of $262.30 million.
In early November, International Rectifier reported a 34 percent decline in profit for the first quarter on softening end market demand for its products. Net income for the quarter was $21.96 million or $0.31 per share, down from $33.50 million or $0.47 per share in the year-ago period. Revenue for the quarter rose 7.8 percent to $302.74 million from $280.87 million in the same period last year.
At that time, the company forecast revenue for the second quarter below analysts' expectations and projected lower gross margins compared to the first quarter due to planned lower factory utilization.
IRF closed Friday's trading at $23.43, up $0.24 on a volume of 321,600 shares.
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