Tags: Xilinix | outlook | stagnate | XLNX

Xilinix Cuts Outlook, Stock Might Stagnate

By    |   Monday, 10 Oct 2011 03:05 PM

Computer chip manufacturer Xilinix (XLNX) had a breakout out year for the company's 2011 fiscal year, which ended in March. After several years of stagnant results, net income nearly doubled and revenues were up by about 25 percent. Now management has cut its outlook and it appears the stock could stagnate as a result.

Xilinix produces programmable logic devices (PLDs), which are logic chips as opposed to memory chips. The company does not manufacture its own chips but designs devices and works in partnership with chip fabrication companies to produce its designs. The company's main competitor in the PLD market is Altera Corp. (ALTR), with market share going to the company with the latest functional designs.

For the company's 2012 fiscal first quarter, which ended in June, revenues increased 3 percent to $615.5 million, up from $595 million. Net income per share was 56 cents, down from 58 cents a year earlier. The actual earnings did beat the consensus estimate of 53 cents. A positive note from the earnings report is that new products made up 51 percent of sales, compared to 39 percent a year earlier and 46 percent in the previous quarter.

Management cuts

In September, Xilinix management updated sales guidance for the first quarter, letting the market know sales for the quarter would be 7 percent to 10 percent lower than in the previous quarter. Previous guidance had forecast sales growth of 1 percent to 3 percent. The company gave no reason for the expected decline.

After the guidance release, analysts jumped in with new target prices. Raymond James analyst Hans Mosesmann cut his target price by $1 but maintained his outperform rating. David Wong of Wells Fargo also reiterated an outperform rating but cut his target by $6.

These analysts both expressed a belief that slower sales have been priced into semiconductor stocks as a group. The company reports next on Oct. 19.

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Computer chip manufacturer Xilinix (XLNX) had a breakout out year for the company's 2011 fiscal year, which ended in March. After several years of stagnant results, net income nearly doubled and revenues were up by about 25 percent. Now management has cut its outlook and it...
Xilinix,outlook,stagnate,XLNX
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2011-05-10
Monday, 10 Oct 2011 03:05 PM
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