Synopsys Results Top Estimates - Update

(RTTNews) - Semiconductor company Synopsys Inc (SNPS), Wednesday reported a decline in second-quarter profit, hurt by weak margins that offset a near four percent growth in revenues. Nonetheless, both earnings and revenues for the quarter topped Wall Street estimates.

Synopsys provided some strong adjusted earnings outlook for the third quarter, while its revenue expectations appear soft. For 2014, the company lifted its adjusted earnings outlook, but tightened the revenue range.

"Our fiscal second quarter results were very strong, driven by robust business in all key areas," said Aart de Geus, chairman and co-CEO of Synopsys.

Mountain View, California-based Synopsys provides software, IP and services used to accelerate innovation in chips and electronic systems.

For the second quarter, Synopsys posted net earnings of $63.3 million or $0.40 per share, compared with $68.7 million or $0.44 per share last year.

Excluding items, adjusted earnings for the quarter were $101.7 million or $0.65 per share, compared with $103.7 million or $0.66 per share in the prior year.

On average, five analysts polled by Thomson Reuters expected earnings of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the second quarter grew 3.7 percent to $517.7 million from $499.3 million a year ago. Analysts anticipated revenues of $512.2 million for the quarter.

Results were mainly offset by operating expenses that climbed to $339.8 million from $312 million last year, due to higher research, sales and other costs.

In March, Synopsys completed the acquisition of Coverity, a provider of software quality, testing and security tools, for about $334 million, net of cash. With the deal, Synopsys enters a new, growing market geared toward enterprise IT and independent software providers in industries such as financial services, energy and retail.

Looking ahead to the third quarter, Synopsys expects net earnings of $0.30 to $0.38 per share, adjusted earnings of $0.60 to $0.62 per share and revenues of $515 million to $525 million. Analysts currently expect earnings of $0.60 per share on revenues of $524.9 million.

For fiscal year 2014, Synopsys now projects net earnings of $1.55 to $1.68 per share, adjusted earnings of $2.45 to $2.50 per share and revenues of $2.05 billion to $2.08 billion.

The company earlier estimated net earnings of $1.72 to $1.83 per share, adjusted earnings of $2.55 to $2.60 per share and revenues of $2.03 billion to $2.07 billion.

Analysts currently expect earnings of $2.46 per share on revenues of $2.07 billion for the year.

Synopsys stock closed Wednesday at $38.49, up $0.29 or 0.76%, on a volume of 769k shares on the Nasdaq. In after hours, the stock dropped $0.24 or 0.62%.