Semtech Profit Tops Estimates; Stock Down On Weak Outlook - Update

(RTTNews) - Semtech Corp. (SMTC), a supplier of analog and mixed-signal semiconductors, Wednesday posted a better-than-expected surge in second-quarter profit, aided by increased sales and margins.

Looking ahead, Semtech provided weak earnings and sales outlook for the third quarter, citing lower demand and inventory corrections at its key smartphone customers. The company expects this trend to continue for the remainder of the year.

Investors were dismayed with the guidance and shares of the company tumbled 10 percent in after-hours trading on the Nasdaq.

Semtech, based in Camarillo, California, reported quarterly net income of $19 million or $0.28 per share, compared with $10 million or $0.15 per share last year.

Excluding items, adjusted earnings for the quarter were $36 million or $0.52 per share, compared with $28 million or $0.41 per share a year ago. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.51 per share. Analysts' estimates usually exclude special items.

Revenues for the quarter were up 9.5 percent at $165.01 million, compared with $150.7 million in the prior year. Analysts estimated revenues of $165.02 million.

The company benefited from strong design win activity during the quarter, said CEO Mohan Maheswaran.

Results were also helped by gross margin that expanded to 61 percent from 49.5 percent a year ago.

For the third quarter, Semtech expects earnings of $0.13 to $0.21 per share, adjusted earnings of $0.31 to $0.37 per share, and revenues of $135 million to $145 million. Analysts estimate earnings of $0.54 per share on revenues of $169.35 million.

Additionally, Semtech's Board approved increasing the existing stock repurchase authorization by $50 million. Prior to the increase, the company had $42.5 million remaining as authorization. The company's stock closed Wednesday at $29.64, down $0.20 or 0.67%, on a volume of about 800 thousand shares. In after hours, the stock dropped $2.82 or 9.51%.