Semtech reports strong 2Q but outlook disappoints

Semtech's 2nd-quarter profit up but forecasts drop in demand in 3rd quarter

Associated Press

CAMARILLO, Calif. (AP) -- Semtech Corp. said Wednesday that its second-quarter net income increased 29 percent on improved revenue and margins. The semiconductor company also increased its stock repurchase plans.

But it issued a weak third-quarter outlook and its shares fell almost 10 percent in after-hours trading Wednesday.

Semtech reported after the market closed that it earned $19.1 million, or 28 cents per share, for the quarter that ended July 28. That is compared to $10 million, or 15 cents per share, for the same quarter last year. After adjusting for stock-based compensation, acquisition-related adjustments and other items, it earned 52 cents per share 41 cents per share last year.

Revenue jumped nearly 10 percent to $165 million from $150.7 million.

The quarter's results nudged just past market expectations. Analysts were anticipating adjusted earnings of 51 cents per share on revenue of $164.9 million, according to FactSet.

Semtech also said that its board increased its share repurchase authorization by $50 million. Prior to the increase, the company had $42.5 million remaining from an authorization plan put in place in 2011.

While Semtech's President and CEO Mohan Maheswaran said that it was a strong second quarter for the company, he said that he expects its third quarter to suffer due to a drop in demand and inventory corrections at several of its largest smartphone customers. He said this should continue to weigh on the company through the remainder of its fiscal year.

The company forecast adjusted earnings of 31 to 37 cents per share on revenue $135 to $145 million for the third quarter. Analysts had forecast earnings of 54 cents per share on revenue of $169.1 million.

Shares of the Camarillo, Calif., company fell $2.82 to $26.82 in after-hours trading following the report. Its shares fell 20 cents to close regular trading at $29.64.

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