TriQuint Surpasses Q1 Earnings Ests - Analyst Blog
April 28 2014 - 11:00AM
Zacks
RF (radio frequency) solutions
provider and technology innovator TriQuint
Semiconductor (TQNT) reported adjusted net loss of $9.4
million or 6 cents per share in the first quarter of 2014 versus
$27.2 million or 17 cents per share in the prior-year quarter.
Adjusted quarterly loss was narrower than the Zacks Consensus
Estimate of a loss of 17 cents. The narrower loss in the reported
quarter was primarily attributable to successful cost reduction
strategies and an improved product mix.
Including non-recurring items, reported net loss stood at $19.1
million or a loss of 12 cents per share compared with a net loss of
$27.9 million or a loss of 17 cents per share in the year-ago
quarter.
Revenues & Margins
Revenues for the reported quarter were $177.6 million, down 4% year
over year, due to unfavorable program timing in the defense market.
Quarterly revenues were in line with the Zacks Consensus
Estimate.
On an end-market basis, quarterly revenues in the Mobile Devices
market, accounting for 58% of total revenue, saw a sequential drop
of 45% year over year driven by seasonality factors and a temporary
inventory correction related to a significant customer. The
Networks market made up 29% of total revenue. Infrastructure &
Defense revenues, accounting for 13% of total revenue, were up 2.0%
year over year and down 4.5% sequentially. Infrastructure continues
to witness healthy demand for base station products in China. The
book-to-bill ratio for the reported quarter was the highest in two
years at 1.22.
Adjusted gross profit was $62.6 million versus $42.0 million in the
prior-year period, recording a 49% year-over-year increase.
Adjusted gross margin improved to 35.3% up 12.5% from the year-ago
quarter. The increase in margin was driven by improved product mix
and efficient factory management and cost streamlining efforts.
Adjusted operating expenses for the quarter increased to $70.9
million from $68.0 million in the year-ago quarter, driven by
higher research and development (R&D) spending.
During the quarter, TriQuint introduced 36 new products and
executed key development projects, strengthening its strategic
position in the RF industry.
Balance Sheet
At quarter end, cash and cash equivalents aggregated $163.5 million
compared with $79.0 million at year-end 2013, driven by a decline
in accounts receivable and cash proceeds from employee stock option
exercises.
Proposed Merger with RFMD
In February, TriQuint announced its plan to merge with rival,
RF Micro Devices Inc. (RFMD). The consolidated
company will possibly be the leading RF player in the
infrastructure and defense markets taken together. In the mobile
space, these two companies have complementary operations with
negligible market overlap.
The merger will offer synergistic benefits and increase the
profitability of the new company through economies of scale and
mutual sharing of manufacturing expertise, research and development
costs and adjustment of staffing expenses. The transaction is
expected to generate $75 million of cost savings in the first year
of its operation, followed by another $75 million in the second
year.
The merger is expected to close in the second half of 2014, and
will reportedly be accretive to non-GAAP earnings in the first full
fiscal year of its operations.
Outlook
Going forward, TriQuint expects second-quarter 2014 revenues in the
range of $215 million to $225 million, indicating a strong
sequential improvement. Revenues are expected to be driven by a
healthy recovery in the mobile segment. Adjusted net income is
expected to be between 6 cents and 8 cents per share. Non-GAAP
gross margin is expected to be 37–38%.
Over the next three quarters, cost reduction initiatives and
improved product mix together are expected to drive gross margins
above 40% on average. Its infrastructure and mobile markets are
expected to witness growth and greater RF value owing to crowded
spectrum, carrier aggregation and increasing LTE (Long Term
Evolution) adoption. The LTE market is in a nascent stage at
present, but its expansion will substantially drive growth for
TriQuint, generating demand for RF content, premium filters and
discrete filters.
Bracing itself up for the next and larger LTE expansion, TriQuint
has restructured its factories and aligned its mobile product
strategy around premium filters, high-efficiency amplifiers and
densely integrated solutions. The company seems well positioned in
each of its markets to build on its momentum.
TriQuint currently has a Zacks Rank #2 (Buy). Notable companies in
the sector are Cypress Semiconductor Corporation
(CY) and Montage Technology Group Limited (MONT),
both carrying a Zacks Rank #1 (Strong Buy).
CYPRESS SEMICON (CY): Free Stock Analysis Report
MONTAGE TECH GP (MONT): Free Stock Analysis Report
RF MICRO DEVICE (RFMD): Free Stock Analysis Report
TRIQUINT SEMICO (TQNT): Free Stock Analysis Report
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