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ANADIGICS Reports a Wider Loss

Zacks Equity Research

ANADIGICS, Inc.(ANAD) reported a loss of $20.9 million or 30 cents per diluted share in the second quarter of 2012 compared with a net loss of $15.8 million or 23 cents per diluted share in the previous quarter and a net loss of $13.0 million or 19 cents per diluted share in the year-ago quarter.

Excluding one-time items, loss came in at 28 cents per diluted share, wider than the Zacks Consensus Estimate of 23 cents per share.

ANADIGICS generated revenues of $25.1 million in the second quarter of 2012, down 11.7% sequentially and 29.5% year over year.

Wireless segment contributed 72% to the total revenue in the second quarter while Broadband contributed the remaining 28%.

ANADIGICS reported Wireless revenues of $18 million in the second quarter, down 14.3% sequentially. This was primarily due to an anticipated reduction of $2 million in revenues from Research in Motion Limited (RIMM) and smaller declines in China OEMS, which witnessed a drop in their own market share as Apple and Samsung enhanced their presence in the smartphone market.

Infrastructure (formerly Broadband) segment generated revenues of $7.1 million in the reported quarter, roughly flat on a sequential basis.

The company had three customers who generated more than 10% of the total revenue – Samsung, ZTE, and Hauwei. Other customers in the quarter include Cisco (CSCO), LG; two distributors - Richardson and World Peace Group; and also Sierra Wireless (SWIR), which replaced RIMM in the quarter.

ANADIGICS reported a gross profit of ($2.1) million in the quarter, down from $6.5 million in the first quarter of 2012. This was mainly due to a decline in revenue and higher costs. ANADIGICS incurred additional costs as the company introduced and deployed new technologies, processes and products.

Research and development expenses declined 4% sequentially. Selling and administrative expenses decreased 6% sequentially to $5.4 million as the company continues to undertake measures to streamline the cost structure. Management implemented new strategies to further reduce its expenses by over $1 million.

ANADIGICS ended the quarter with cash and equivalents of $17.1 million, down from $24.1 million at the end of the previous quarter.

During the quarter, ANADIGICS incurred $0.7 million in capital expenditures while capacity utilization was 40% during the quarter.

Going forward, management did not provide any specific guidance for the coming quarter. ANADIGICS believes that revenues have stabilized as new products and wireless ramp will offset the decline in the legacy business. Management also expects gross margin to improve as revenues recover and the company completes the transition from legacy to new products.

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

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