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Inphi Q3 Loss Widens, Revs Beat

Zacks Equity Research

Inphi Corporation (IPHI) reported third-quarter 2013 net loss of $2.8 million or 9 cents per share wider than at net loss of $1.5 million or 5 cents per share in the year-ago quarter. The quarterly loss was also wider than the Zacks Consensus Estimate of a loss of 8 cents

The widening loss year-over year was due to increase in company's operating expenses in the reported quarter.                 

In addition the company reported adjusted net income (excluding stock-based compensation expense and valuation allowance and delta in interim period tax allocation) of $1.1 million, or 4 cents per share, against net income of $1.5 million, or 5 cents per share in the year-ago quarter.


Though the company disappointed on earnings, it reported record quarterly revenues during the quarter. Revenues jumped 9.5% sequentially and 7.2% year over year to $26.6 million. The quarterly revenues also exceeded the Zacks Consensus Estimate of $26 million. 

The growth in revenues was primarily aided by double-digit growth in communications and server revenues.


Gross margins in the quarter fell 150 basis points (bps) to 63.2%, whereas operating expenses rose 18% to $19.9 million from the year-earlier quarter. Operating loss in the reported quarter was $3.1 million much wider than $0.8 million in the year-ago quarter.

Balance Sheet

As of Sep 30, 2013, the company’s cash and cash equivalents and marketable securities totaled $119.3 million, compared with $121.3 million as of Dec 31, 2012.


Increased spending in mobile, the transition to cloud, introduction of silicon photonics and the critical role of memory and big data, are major driving factors in the demand for Inphi’s high-speed, mixed signal semiconductor products. The company expects to benefit from these trends in the upcoming quarters.

Inphi’s projected range for revenues in fourth-quarter fiscal 2013 is $28 million to $29.6 million, up 5%–-11% sequentially.  Moreover, it expects net loss between $0.94 million to $1.52 million, or 3 cents–5 cents per share.

However, excluding stock-based compensation expense, the company expects to report adjusted net income in the range of $1.3 million to $1.76 million, or 4 cents–6 cents per share.

Inphi currently carries a Zacks Rank #3 (Hold). Some better-placed stocks in the same industry are Microchip Technology Inc. (MCHP), Supertex Inc. (SUPX) and NXP Semiconductors NV (NXPI). While Microchip and Supertex both carry a Zacks Rank #1 (Strong Buy), NXP Semiconductor holds a Rank #2 (Buy).

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