Top Performer for Monday: O2Micro (OIIM)

O2Micro International Ltd. (OIIM - Snapshot Report) now expects better second-quarter sales than it had previously thought, which has sent shares of the company higher by 8% today.

That's more than enough for the company to make the Zacks #1 Rank Top Performers List on a tough day that sees the Dow and NASDAQ each down by more than 2%.

OIIM develops and markets innovative power management and security components for the computer, consumer, industrial and communications markets. Its products include intelligent lighting, battery management, power management and SmartCardBus(R) products. It has almost 12,000 patent claims granted, and more than 14,000 more pending.

Q2 Sales Expected to Rise 47% Sequentially

OIIM now anticipates second-quarter revenue of $34 million. Previously, it was expecting between $26.6 million and $28.9 million.

The company said the new guidance reflects resilient demand in the LCD TV market, the continued ramp of new products and growth in the Chinese markets.

"We are seeing follow through from many of the same factors that contributed to our upside surprise in the first quarter," said Chairman and CEO Sterling Du. "These factors are validating our long-term investments in China and new products, as well as helping us to overcome challenging business conditions."

Q1 Surprise was More Than 40%

That "upside surprise in the first quarter" reflects a loss per ADS of 10 cents, which was much narrower than the consensus' expected loss of 17 cents by 41.2%. OIIM enjoys a good record of meeting or surpassing Wall Street's quarterly expectations, and has put together an average surprise of around 17% in the past 4 quarters.

The quarter was not without its challenges, though, stemming from the global economic slowdown. Earnings were down from the year-ago profit of 6 cents, while sales declined 38.5% to $23.1 million.

Nevertheless, the sales result was better than the company's expectations.

Earnings Estimates on the Rise

Even before announcing its second-quarter sales guidance, earnings estimates for OIIM were on the rise - stemming from its first-quarter report and recent patents. Analysts continue to expect a loss for this year, which has narrowed significantly to 21 cents from 44 cents over the past 2 months. That includes a narrowing of 3 cents in just the past 7 days as 1 of 5 analysts revised higher.

Analysts see a return to profitability for next year. The current consensus of a 10-cent profit is way up from a loss of 44 cents 2 months earlier. Furthermore, the past 7 days have seen a surge of more than 66%.

For the second quarter, the expectation for a loss of 7 cents per share has narrowed by 7 cents in 2 months and a penny in 7 days.

Semiconductors Getting Back on Track?

OIIM is part of the electronic components - semiconductors industry. For a space that was hit hard by the economic downturn, it is well represented on today's 223-stock Zacks #1 Rank List with 8 entries. Excluding OIIM, other semiconductor companies on the list include Advanced Semiconductor Engineering (ASX - Snapshot Report), Conexant Systems (CNXT) and DSP Group (DSPG - Snapshot Report).

The possible recovery of the semiconductor industry was the focus of Charles Rotblut's Zacks Industry Rank Analysis feature last week. In an article titled "Chip Industry Starting to Recover", Charles touched on the positive signs coming from the space, including Texas Instruments (TXN - Analyst Report) raising its second-quarter guidance and an improving revisions ratio.

Read the full analyst report on DSPG

Read the full analyst report on CNXT

Read the full analyst report on ASX

Read the full analyst report on OIIM

Read the full analyst report on TXN