Narrower-than-Expected Loss for TriQuint

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RF (radio frequency) solutions provider and technology innovator TriQuint Semiconductor Inc.’s (TQNT) net loss widened to $14.9 million or 9 cents per share in the second quarter of 2013 from a net loss of $13.1 million or 8 cents in the year-ago quarter. However, non-GAAP loss narrowed to $10.9 million or 7 cents per share in the reported quarter versus net loss of $15.0 million or 9 cents per share in the prior-year quarter. The adjusted quarterly loss was also narrower than the Zacks Consensus Estimate of a loss of 15 cents.

Revenues for the reported quarter were $190.1 million, up 7% year over year with strong performance across all markets. However, quarterly revenues missed the Zacks Consensus Estimate of $192 million. On an end-market basis, revenues in the Mobile Devices market improved 5% year over year to $117.9 million, accounting for 62% of the total revenue. Network Infrastructure revenues increased 1.6% year over year to $45.6 million, and Defense and Aerospace revenues were up 28.4% to $26.7 million, representing 24% and 14% of the total quarterly revenue.

Gross profit (:GAAP) was $56.7 million versus $44.9 million in the prior-year period. Gross margin was 29.8% versus 25.2% in the year-ago period. The increase in margin was driven by higher revenues, higher factory utilization and better yields. Operating expenses (:GAAP) for the second quarter of 2013 increased to $73.1 million from $69.4 million in the year-ago quarter, primarily due to higher R&D spending.

During the reported quarter, TriQuint achieved a remarkable feat of being the industry pioneer for gallium nitride (GaN) transistors using GaN-on-diamond wafers. TriQuint’s GaN devices power amplifiers for defense, industrial, aerospace and commercial applications. With increasing usage of GaN transistors in diversified sectors, TriQuint intends to expand its presence to further augment its revenues. The company accelerated GaN offerings with 15 new products and two new Foundry services and introduced new chipsets for point-to-point radios serving 3G/4G cellular backhaul.

At quarter-end, cash and cash equivalents aggregated $74.5 million. Total cash investments decreased by $51.8 million to $89.3 million during the reported quarter, due to 7.7 million share repurchases for $51.1 million and increased inventory. The company borrowed $20 million for short-term liquidity. Capital expenditures of $27.9 million were primarily related to capacity expansion for premium filters.

Going forward, TriQuint expects third quarter 2013 revenues to be in the range of $245 million to $255 million, with non-GAAP gross margin in the range of 34% - 36%, driven by higher revenues. Non-GAAP earnings are expected to be between 9 cents and 11 cents per share.

TriQuint is expanding its capacity for high-performance filters as it anticipates a strong demand in the second half of 2013 and beyond. This is likely to improve its performance in the coming quarters. The company is well positioned in each of its markets to build on its margin momentum.

TriQuint currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth considering now are PMC-Sierra Inc. (PMCS), Cypress Semiconductor Corporation (CY) and Advanced Micro Devices, Inc. (AMD), each carrying a Zacks Rank #2 (Buy).

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