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23 April 2008


Anadigics sales rise 10% to a record $74.4m

For first-quarter 2008, Anadigics Inc of Warren, NJ, USA has reported its 12th consecutive quarter of revenue growth, to a record $74.4m. This is up 10% on $67.6m the prior quarter and up 50% on $49.6m a year ago. It is also well above February’s forecast of $68-70m, due to stronger-than-expected revenue in 3G, CATV set-top box and cable infrastructure. Setup box revenue rose 10.2% sequentially), while CATV infrastructure revenue fell less than expected.

Wireless revenue was $51.2m (up 21.1% sequentially and 105% year-on-year), with 3G comprising 98% of wireless revenue (up from 77% a year ago). EVDO ($15.8m) represented 31.5% of 3G revenue.

Broadband revenue was $23.2m (down 8.5% sequentially and 5.8% year-on-year). The top customers included Samsung, Intel, LG and Walway.

After expecting an unfavorable product-mix shift from lower CATV infrastructure revenue, and despite increased investments in manufacturing, gross margin unexpectedly rose, from 36.1% last quarter to 36.8%. This was due to higher-than-expected absorption rate coverage on fixed overhead in manufacturing as well as the deferral of certain fab personnel recruitment into Q2/2008. However, since Anadigics has focused product development and marketing on advanced 3G EDGE, WEDGE, wideband, CDMA, HSPA and CDMA-EVDO technologies, 3G wideband CDMA EDGE products are ushering in higher gross margins, points out president and CEO Dr Bami Bastani; “it is not just broadband product mix that enhances our gross margin now”.

Net income was $3.9m, an improvement from $2.9m the prior quarter and a net loss of $1.2m a year ago. During the quarter, cash balance fell from $176.8 to $166.5m. Capital expenditure spending was $21m, and depreciation was $3.2m.

“Anadigics' performance in the first quarter exemplifies our commitment to our business execution strategies,” says Bastani. “ We continued our efforts in increasing manufacturing output and manufacturing capacity.” This should occur through: (i) fab output reaching full capacity in second-half 2008; (ii) flexible wafer capacity being added by developing foundry relationships (currently underway, with products shipments expected by Q4/2008) ; and (iii) completing build out of Anadigics’ new fab in Kunshan, China (due to come online in second-half 2009).

“We continue to implement our market-share expansion plans and have created deeper relationships with our customers and suppliers,” Bastani adds. New product launches during the quarter included the ACA2604 RF amplifier for fiber-to-the-home (FTTH) applications in late February and the new AWT6309 linear power amplifier for AWS and KPCS CDMA/EVDO mobile equipment at the beginning of April.

“Our business outlook remains positive,” says executive VP and chief financial officer Tom Shields. With CATV infrastructure on track to resume growth in Q2/2008, Anadigics expects a 13 th consecutive quarter of revenue growth to $77-79m (up 4-6% sequentially and up 43-47% from $53.9m on a comparable basis year-on-year).

“We remain optimistic about the growth opportunities in our industry as a whole,” says Bastani. “The power amplifier market is in a new phase of growth, with 3G requiring multiple amplifiers and Wi-Fi providing a second engine for growth,” he adds, citing Strategy Analytics’ market forecast that the gallium arsenide IC market will exceed $5bn by 2012. “We are building our company as a major player to secure healthy market share of that business. We are equipped to achieve these goals, as we are on track with our capacity additions in New Jersey, our foundry developments in Asia [with 10-20% the right mix in terms of dependence on foundries], and our building construction in China,” Bastani concludes. Total capital expenditure should be about $50m in 2008. “We believe for the foreseeable future that capacity and market demand for the industry will be at a tight balance as the demand for advance multiple power amplifiers for 3G and Wi-Fi challenge the available capacity.”

See related item:

Anadigics’ record sales boosted by 3G and WLAN/WiMAX

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