Silicon Labs sees earnings soar 76%
Austin chip company's sales surge a record 60% amid strong demand
By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Tuesday, October 21, 2003
Resurgent sales of cellular phones helped propel Austin chip company Silicon Laboratories Inc. to record financial results in the third quarter.
The company reported net income of $13.9 million, or 26 cents a share, on revenue of $82.9 million. Sales were up 60 percent from the same quarter a year ago, while profit climbed 76 percent.
The company said it expects to record sales of $92 million to $95 million in the fourth quarter with earnings per share of 27 cents to 29 cents.
Earnings were ahead of analysts' estimates, which averaged 24 cents a share, according to Thomson First Call. The results were released after the close of the market, after the company's stock dropped 7 cents a share to close at $49.95 in Nasdaq trading. But the stock rose $1.10 a share to $51.05 in after-hours trading.
Chip sales to wireless manufacturers accounted for 53 percent of the company's revenue and one cell phone maker, South Korea's Samsung, accounted for 22 percent of sales.
But the company, which is wary of being over-dependent on any single customer, emphasized that it is diversifying its sales base.
The company now has 22 cell phone customers, up from 16 in the second quarter. The company's most successful product is a radio transmitter-receiver for cell phones.
"Business was strong across all of our product areas," chief executive Nav Sooch said. "We believe that we are successfully gaining market share in existing markets while simultaneously expanding to new markets and applications."
Analysts praised the company's results.
"They are executing and gaining market share. It's a nice combination," said Brian Modoff with Deutsche Bank Securities Inc.
"It was an excellent quarter," said analyst Cody Acree with Legg Mason Wood Walker Inc. in Dallas. "Anybody that plays into the wireless market is having an extremely strong period. Silicon Labs has been executing very well, and they are at the forefront of that."
Chip makers Intel Corp. and Texas Instruments Inc. also reported strong results for the third quarter.
Despite the company's close ties to Samsung, Silicon Labs says its roster of other customers is just starting to take off.
"There is a lot of room to grow," said Dan Artusi, the company's president and chief operating officer.
Wireless wasn't the only growth area. The company has a chip set that is widely used in modems for laptop computers, which is the fastest-growing segment of the PC industry.
Its chips also are used in advanced telecommunications gear and in television set-top control boxes.
As profits grow, so do the company's cash holdings. It ended the quarter with $143 million in cash and short-term investments, up from $131 million at the end of the second quarter.
For the first three quarters, Silicon Labs earned $23.8 million, or 46 cents a share, on sales of $215.7 million. That compares with income of $10.9 million, or 21 cents a share, on sales of $121.8 million for the same period of last year.
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