23 July 2010


Hittite grows 52% year-on-year to $60.3m in Q2

For second-quarter 2010, Hittite Microwave Corp of Chelmsford, MA, USA, which designs and supplies analog and mixed-signal RF, microwave and millimeter-wave ICs, modules and subsystems, has reported revenue of $60.3m. This is up 52% on $39.7m a year ago and 11.3% on $54.2m last quarter, driven by the increasing demand for additional wireless data bandwidth and network capacity.

About 45.6% of total revenue ($27.5m) came from customers in the USA and 54.4% ($32.8m) from outside the USA, compared to Q1's 44.3%:55.7% ($24m from the USA and $30.2m from outside the USA). Sequential growth was 15% in the USA (driven by the military market) and 8.6% outside the USA (driven by the microwave communication markets).

About 84% of revenue came from three of Hittite's eight markets: cellular infrastructure, microwave and millimeter-wave communications, and military. The remaining markets (automotive, broadband, fiber-optic, space and test & measurement) accounted for 16%.

Gross margin has risen further, from 70.4% a year ago and 73.4% last quarter to 74.8%, due mainly to product mix.

Operating expenses rose by 5% in Q2, due mainly to R&D expenses rising from $5.2m a year ago and $7m last quarter to $7.8m (13% of revenue) as expanding activities in the firm's design centers drive up personnel costs (which will continue throughout 2010). Sales & marketing expenses have risen from $3.7m a year ago and $4.6m last quarter to $4.9m (8.1% of revenue), due mainly to commission for third-party representative.

Despite the rise in overall expenses, net income has continued to rise, from $10.6m a year ago and $16.1m last quarter to a record $19.2m. This exceeded guidance, due to slightly higher-than-expected revenue, stronger-than-expected gross margin, and lower-than-expected general & administrative (G&A) expenses, which have been cut from $3.1m last quarter to $2.7m (4.4% of revenue), due mainly to a reduction in third-party professional fees.

During the quarter, total cash and cash equivalents rose by a further $3.6m to $241.8m.

Hittite's strategy is to expand its product portfolio to capitalize on the demand for additional wireless data bandwidth and network capacity and to take market share. In Q2, the engineering and product development team launched 23 new products, making 55 year-to-date and bringing the standard product portfolio to 857.

Three new IC product lines (broadband time delay products for 40 and 100G fiber optics; mux & demux for 40 and 100G fiber and test systems; DC power control products for amplifier biasing) also expand Hittite's offerings for the cellular, fiber and microwave markets, as well as boosting the total number of product lines to 28. "Each new product line will offer unique products, which will enable us to capture more performance-based non-commodity business," reckons chairman & CEO Stephen Daly. Hittite expects that, as the new product lines expand, they will increase its addressable market by more than $75m as well as expanding its customer base.

“Over the past four years, we have launched many new product lines, and many are just beginning to ramp up in revenues," comments Daly.

For third-quarter 2010, Hittite expects revenue of $62–64m (up 6% on Q2 and 54% year-on-year) and net income of $19.1–19.8m, assuming gross margin of 72-73% and operating expenses up 5-6% due to expansion activities.

In particular, Hittite expects cellular, military, test & measurement, space, and fiber-optic markets to be strong, automotive and microwave communications markets to be neutral, and the broadband market to be weak.

See related items:

Hittite acquires license to IBM millimeter-wave technology

Hittite’s quarterly growth accelerates to 24%

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