Xilinx Inc. today announced that revenue and earnings grew sequentially in the December quarter for the first time since March.
For its fiscal third quarter of 2002, Xilinx reported $228.8 million in revenue, up 2% from $224.6 million in the September quarter, while net income was $9.7 million, or 3 cents per diluted share, compared to a net loss of $10.5 million a quarter ago.
Xilinx earlier said it expected revenue to drop 5% in the quarter.
"Our business has finally stabilized after declining for three quarters in a row," said Wim Roelandts, president and chief executive of the San Jose-based company in a conference call with analysts. "We exceeded our guidance for the quarter, and we expect to gain market share versus other PLD suppliers."
Roelandts attributed the gains to a brisk uptake of its high-priced Virtex-II programmable chips, and a strong position at global accounts relative to competitors.
Higher average selling prices also helped to elevate gross profit margins to 55%, added Xilinx's chief financial officer, Kris Chellam.
Signs of strength returning at North American communications OEMs is good news for Xilinx, which derives nearly 70% of revenue from this segment, said Christopher Danely, an analyst at Merrill Lynch & Co., San Francisco in a report issued today.
"We believe the PLD inventory correction is nearly over," with Xilinx's sequential increase "driven by increased sales to Cisco and Lucent," Danely wrote. "We also believe most North American comm OEMs are indicating revenues will increase [sequentially] at Xilinx during the March quarter, providing the first increase in visibility in two years."
Having spent much of last year working down or writing off excess inventory, supplies are "under control," Chellam said. Inventories at Xilinx are at 131 days, while its distributors are holding 35 days worth, he said.
Xilinx said third-quarter revenue grew in all regions except for Japan, which is still suffering from a weak economy. Additionally, Xilinx's exposure to Japan is largely in the 3G base station area, which has been slow to take off.
Pro forma net income, which primarily exclude the amortization of intangibles, was $23.5 million, or 7 cents a share, compared to a loss of 13 cents for the second quarter and a profit of 31 cents for the third quarter of fiscal 2001.
Gross margin of 55% during the quarter was better than expected primarily due to product mix shifts and manufacturing efficiencies. Additionally, operating expenses decreased $2.3 million from the September quarter.
For the quarter, North America represented 53% of revenue, Europe 20%, Japan 12%, and Asia Pacific 15%. Communications was the largest end market at 69%, storage and servers 18%, and other markets 13%.