2 November 2010


Anadigics’ revenue grows 18.6% in Q3 to $61.3m

For third-quarter 2010, GaAs-based broadband wireless and wireline communications component maker Anadigics Inc of Warren, NJ, USA has reported a sixth consecutive quarter of revenue growth, to $61.3m. This is up 67% on a year ago and up 18.6% on Q2's $51.7m (exceeding the guidance of 11% growth to $57.5m).

The latter reflects Anadigics’ increased 3G market share position within its wireless customer base and the positive traction and market share gains realized in both WiMax and cable infrastructure within Broadband, according to president & CEO Mario Rivas. According to a recent report from Strategy Analytics, Anadigics’ global market share for wireline CDMA power amplifiers has risen from 18% in Q2 to 22%.

Of total revenue, Wireless grew 18.1% from $38.3m to $45.2m and Broadband grew by 20% from $13.4m to $16.1m (compared with growth of just 2% last quarter). “The third quarter benefited from stronger order pull in both Wireless and Broadband ahead of the typical fourth quarter holiday trade season, which will affect the revenue in our fourth quarter,” notes Rivas.

With fab utilization exiting Q3 in the low 70s (up from the mid-60s in Q2), gross margin has risen from to 35.6% last quarter 37.2% (exceeding guidance of “nearly 37%”).

Compared with a loss of $6.4m a year ago, non-GAAP net income has quadrupled from $1.1m last quarter to $4.4m (exceeding guidance), which is attributed to the stronger revenue and operating leverage.

Cash flow from operations was $5m, contributing to cash, cash equivalents and short- and long-term marketable securities rising during the quarter by $4.2m to $96m, after capital expenditure of $1.4m.

For fourth-quarter 2010, Anadigics expects revenue to drop by 7% to about $57m. “This reflects a pause in orders, caused by inventory re-balancing, by our Broadband customers following the robust 20% sequential growth reported in the third quarter, and shortened order lead times by Wireless customers, particularly in Korea and China, attributable to the solid order pull in the third quarter,” says executive VP & chief financial officer Tom Shields. Broadband revenue could fall by about 25%, but this is viewed as temporary given the typical fourth-quarter seasonality in Anadigics’ business in prior years. “Our current backlog for Wireless is equal to the Wireless revenue reported in the third quarter [i.e. $45m], but higher than historical fill levels,” notes Shields.

Fab utilization should rise to the mid 70s during Q4. “Sequentially, we expect slightly higher gross margin and lower operating expenses, with both GAAP and Non-GAAP earnings per share in the fourth quarter to approximate third-quarter levels of $0.03 and $0.06, respectively,” says Shields. “We also expect to exit the year above $100m in cash, cash equivalents and short and long-term marketable securities on anticipated positive cash generation in the fourth quarter,” he adds. “If we can strategically acquire either a company or a group of engineers that can help us accelerate development, then we will.”

“Looking into 2011, we are very excited about our new product design portfolio for 3G, 4G/LTE and multi-mode multi-band (MMMB) and several design engagements with chipset providers and tier 1 OEMs,” says Rivas, who adds that, in Q3, Anadigics’ new product pipeline produced over the last year accounted for more than 40% of revenue. “In particular, we officially signed a cooperation agreement with a new reference design partner [Infineon], initiated design activities with another new reference design partner, and increased design activities with an existing reference design partner,” he adds. “Enhancing our business prospects longer term, we also completed negotiations on a product purchase agreement with one of the larger tier 1 OEMs,” Rivas continues. “With the industry’s strong 3G unit growth forecasted next year in wireless handsets, we expect 2011 to be another positive year for our company,” he concludes.

“In Broadband, we have a line up of new products addressing market drivers in DOCSIS 3.0-enabled devices, cable modems, CATV subscriber home gateways, hybrid line amplifiers and 75-Ohm gain blocks for CATV infrastructure, mobile WiMax-enabled devices and small-cell wireless infrastructure for 3G and 4G coverage including picocells and femtocells, which positions the company well in 2011,” says Rivas.

“Despite the short-term seasonal fluctuations in this business, we remain confident in the long-term growth opportunities for Anadigics,” says Rivas. “Based on the industry research and our own internal estimates, we project a compounded annual growth rate (CAGR) from 2009 to 2014 for cable infrastructure and mobile WiMAX market to be 14% and 73%, respectively.”

See related items:

Anadigics enters profit as sales rise 18.7% in Q2 to $51.7m

Anadigics revenue rises 4.1% to $43.5m as loss is cut further

Anadigics’ sales rise 13.9% in Q4/2009

Anadigics upbeat on future wireless markets

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