SAN FRANCISCO—NXP Semiconductors NV Thursday (July 28) reported a sequential increase in product revenue for the ninth consecutive quarter, but said the streak could come to an end in the third quarter because of a pause in demand from automotive customers following the March 11 earthquake in Japan, slower-than-expected deployment of near field communications (NFC) technology and global macroeconomic weakness.
Richard Clemmer, NXP's CEO, said in an interview that NXP continued to grow product revenue faster than peer companies despite experiencing a slowdown in gross margin expansion within the company's high-performance mixed signal product segment that stemmed from changes in product mix combined with increased costs.
"We had some headwinds that came from Asian currencies that did not continue to operate in line with the U.S. dollar, which increased our cost basis," Clemmer said. Gross margins were also hit by increased costs for precious metals and costs associated with increasing capacity for embedded flash production, Clemmer said.
NXP (Eindhoven, the Netherlands) reported revenue for the quarter of $1.12 billion, up 4 percent from the previous quarter and up slightly from the year-ago quarter. The company reported a net income in accordance with generally accepted accounting principles (GAAP) of $84 million, compared with a net income of $187 million in the previous quarter and a GAAP net loss of $362 million in the year-ago quarter.
On a non-GAAP basis, excluding charges, NXP reported net income of $130 million, or 51 cents per diluted share, compared with non-GAAP net incomes of $117 million and $74 million in the previous and year-ago quarters, respectively.
NXP reported product revenue from continuing operations of $1.03 billion, up 5 percent compared to the previous quarter and up 11 percent compared to the year-ago quarter. It was the ninth consecutive quarter in which NXP's product revenue from continuing operations grew sequentially, NXP said. Product revenue is the combination of sales from the company's high-performance mixed-signal and standard products segments.
NXP said its net debt total was down $383 million compared with the year-ago quarter and stood at $3.85 million. The company said the Standard and Poor's credit rating agency raised the company's credit rating to "B+" from "B-."
NXP said revenue from its high-performance mixed signal product segment increased 5 percent sequentially, paced by strong demand from its Wireless Infrastructure, Industrial and Lighting business with high-performance RF power amplifiers, 32-bit ARM-based MCUs and lighting products all showing strong sequential growth.
For the third quarter, NXP said it expects product revenue to be down 5 percent to up 1 percent sequentially. Clemmer cited a slight pause in demand from automotive customers related to inventory issues in the wake of the Japan earthquake, macroeconomic uncertainty, and pushouts of NFC deployments.
NXP now expects NFC growth this in 2011 to be lower than previously expected, Clemmer said, adding that the company's NFC technology is currently being designed into 62 cellular handsets. "NFC is clearly not experiencing the kind of growth that we had originally anticipated this year," Clemmer said.
NXP, Quarter, Clemmer, Revenue NXP grew again in Q2; may decline in Q3
