Semtech Swings To Loss On Impairment Charges - Update

(RTTNews) - Semiconductor company Semtech Corp. (SMTC), Wednesday posted a huge loss for the fourth quarter, hurt mainly by a hefty impairment charge and lower revenues. Nonetheless, the chip maker's adjusted earnings for the quarter came in line with analysts' expectations, while revenues beat estimates.

Camarillo, California-based Semtech reported a fourth-quarter loss of $210.8 million or $3.12 per share, compared to a profit of $13.1 million or $0.19 per share last year.

Semtech recorded restructuring and impairment related charges of $178.9 million resulting from its strategic decision to reduce the level of investment made in the optical long-haul market.

Excluding items, earnings for the quarter were $15.5 million or $0.23 per share. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.23 per share for the quarter. Analysts' estimates typically exclude special items.

Semtech, which makes analog and mixed-signal semiconductors, said revenues for the fourth quarter dropped 16 percent to $126.5 million from $150.6 million last year. Analysts had a consensus revenue estimate of $125.14 million.

Gross margin for the fourth quarter decreased to 42.5 percent from 58.4 percent last year.

Commenting on the results, Chief Executive Mohan Maheswaran said, "The continued pushout of communications Infrastructure capex spending resulted in a decline in our Advanced Communications Product group revenue. In addition, the move by some of our customers to potentially use their own internal ASIC solutions in the future led us to reduce our investments in the long haul optical market."

Looking forward to the first quarter, the company expects earnings of $0.10 to $0.14 per share, adjusted earnings of $0.28 to $0.32 per share and sales of between $127.0 million and $133.0 million. Analysts currently see earnings of $0.30 per share on revenues of $130.9 million for the quarter.

SMTC closed Wednesday's trading at $25.59, up $0.13 or 0.51%, on the Nasdaq. The stock further gained $0.40 or 1.56% in after-hours trade.