News

23 October 2009

 

TriQuint’s growth slows prior to expected Q4 pick-up

For third-quarter 2009, RF front-end product maker and foundry services provider TriQuint Semiconductor Inc of Hillsboro, OR, USA has reported revenue of $173m (63% from handsets, 25% from networks and 12% from defense & aerospace; or 58% from Asia, 37% from Americas and 5% from Europe). This is down 7% on $186.3m a year ago and up just 2% on last quarter’s $169.1m (compared to Q1’s sequential growth of 42%).

However, says president & CEO Ralph Quinsey, “TriQuint revenue, in the last six months, is up 28% compared with the previous six months, demonstrating a strong rebound from the economic slowdown [better than the industry as a whole]”. Most recently, in Q3/2009, all three of the firm’s markets grew sequentially.

Networks revenue grew the most (13%), driven by an 83% rise in wireless client revenue (due to increased demand in wireless LAN as excess inventory was cleared by a key customer). Transport revenue was down sequentially, with weakness in point-to-point radio, VSAT and cable, but this was offset by growth in optical markets and some growth in emerging markets (particularly automotive radar, due to the launch of a new program). However, general weakness persists in the transport submarket as carriers remain cautious on 2009 capital expenditure. “Networks revenue has been slower to recover than anticipated,” comments chief financial officer Steve Buhaly.

Handset revenue was up only slightly sequentially, but up 11% on a year ago (EDGE up 136% and CDMA up 6% — wideband CDMA grew only slightly, but this was compared to an extraordinarily strong year-ago quarter, during which TriQuint completed a major 3G program launch). GSM revenue fell 22% year-on-year, but this contributed to improved handset margins. While handset unit sales are down about 7% in 2009, TriQuint says that it is benefiting from healthy demand for 3G products (up 15-20%). Year-to-date, TriQuint’s handset-related revenue is up about 30% (largely due to W-CDMA being up 60%, with CDMA up 10-12% and GSM down about 30%). “I see no significant inventory problems in the handset market, although inventory adjustments at specific customers happen regularly,” says Quinsey.

Defense and aerospace revenue grew 40% on a year ago (due to radar programs such as the Joint Strike Fighter) but just 6% sequentially. “The long-anticipated flattening in the Department of Defense is certainly upon us, but TriQuint continues to benefit from new program ramps, our ability to attract new research revenue, and our investments in new technologies,” says Quinsey. Highlights for the quarter include a new $16.2m three-phase research contract (over four and a half years) from the US Defense Advanced Research Projects Agency (DARPA) for the Nitride Electrical NeXt-Generation Technology (NEXT) program, targeting 500GHz operation.

On a non-GAAP basis, Q3/2009 gross margin was 35%, up from 33.2% last quarter due to improved factory utilization (75%, including 77% in Oregon and 39% in Texas) as well as the elimination of inefficiencies associated with high sequential revenue growth in Q2/2009.

Non-GAAP net income was $15.7m, down from $17.1m a year ago but up from $11.5m last quarter.

Cash flow from operations was $45.7m. Primary uses of cash were $14.8m in capital spending and $8m for acquiring TriAccess Technologies of Santa Rosa, CA, a provider of cable TV (CATV) and fiber-to-the-home (FTTH) devices. Nevertheless, cash, cash equivalents, and investments still rose by $35.2m to $134.6m, and TriQuint has no debt.

For fourth-quarter 2009, TriQuint expects revenue of $175-185m, representing growth of growth of 20% year-on-year and 4% sequentially (due mainly to handsets growing 8-10%, despite a Korean customer making a demand adjustment to eliminate excess inventory). As of 21 October, TriQuint is 91% booked to the mid-point of the revenue guidance. The firm also expects non-GAAP gross margin of 35-37%. Cash reserves are expected to rise by a further $15m. “As we generate more cash, we’ll look at our merger and acquisition opportunities, and other opportunities as well,” comments Buhaly.

See related items:

TriQuint’s revenue rises 42% sequentially

TriQuint sees demand return as handset inventory burns off

Impairment charges drive TriQuint into Q4 loss

TriQuint cuts Q4 revenue guidance from $160-175m to $140-145m

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