Loss Widens at ANADIGICS


ANADIGICS, Inc. (ANAD) reported a loss of $15.8 million in the first quarter of 2012 or 23 cents per diluted share compared to a net loss of $10.7 million or 16 cents per diluted share in the year-ago quarter.  Excluding one-time charges but including stock-based compensation expense, net loss came in at 24 cents per share, wider than the Zacks Consensus Estimate of a loss of 21 cents per share.

ANADIGICS generated revenues of $28.4 million in the first quarter of 2012, down 22% sequentially and down 35% year over year.

Wireless segment contributed 75% to the total revenue in the first quarter and Broadband contributed the remaining 25%.

As expected by ANADIGICS, wireless revenues came in at $21.0 million in the first quarter, down 29.8% sequentially due to seasonality and the tailing off a business with one of its prime customers – RIMM. In addition, other customers are also reducing inventories.

Broadband segment generated revenues of $7.4 million in the fourth quarter, up 12.1% sequentially and up 12.0% year over year. The growth was primarily due attributable to the loosening of fourth quarter supply constraints caused by the flooding in Thailand.

The company had four customers who generated more than 10% of total revenue – Samsung, ZTE, and Hauwei.

Gross margin plummeted to 6.7% from 16.5% in the previous quarter due to lower revenues leading to lesser absorption of fixed manufacturing costs. Capacity utilization was 45% during the quarter.

Research and Development spending was up sequentially 12% to $10 million, as the company continued to introduce new product offerings, such as MMPA and PADs, as well as advanced-generation dual- and single-band discretes. Selling and administrative expenses were largely flat on a sequential basis.

The company ANADIGICS ended the quarter with cash and equivalents of $24.8 million, down from $32.7 million at the end of 2011.

The company is taking steps to reduce its expenses by $8 million on an annualized basis. The majority of the savings are being implemented in areas where operating efficiency can be improved while maintaining strong R&D investments in support of growth beginning in the late second half 2012 and into 2013.

Going forward, ANADIGICS expects a sequential decline in revenues primarily due to a final step down in sales to one of the former customer. ANADIGICS continues to face challenges in an uncertain economic environment and there is no respite from weakening demand in the near-term.

Hence, we continue to maintain a Neutral recommendation on ANADIGICS. Our recommendation is supported by Zacks #3 Rank, which translates into a short-term rating of Hold.

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