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Lattice (LSCC) Incurs Higher-than-Expected Loss in Q2
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Lattice Semiconductor Corporation (LSCC - Free Report) reported second-quarter 2016 loss per share of 3 cents, greater than the Zacks Consensus Estimate loss of 2 cents.
Revenues
Lattice’s revenues of $99.2 million increased 2.8% sequentially but decreased 6.8% year over year. Also, revenues crawled at ll the lower end of the company’s guidance range of $97-$103 million, and grazing below the neck of the Zacks Consensus Estimate of $100.0 million.
The sequential increase was driven by strength in industrial end market as well as increased licensing and services revenue.
Revenues by End Market
Communications and Computing segments contributed 29% to Lattice’s second-quarter sales, down from 34% in the last quarter; Mobile and Consumer segment brought in 24% of total sales, down from 26% in the previous quarter; Industrial and Automotive segment brought in 37% of total sales, up from 31% from the previous quarter; while the Licensing and Services segment generated the remaining 10%, up from 9% in the first quarter.
Revenues by Geography
On a sequential basis, Asia accounted for 68% of Lattice’s sales, flat with that of the prior quarter; Europe, including Africa, generated 15%, down from 17% in the previous quarter, while the Americas contributed the remaining 17%, up from 15% in first–quarter 2016.
Margins
Reported gross margin was 58.9%, down 30 basis points (bps) year over year but up 630 bps sequentially. The sequential decrease was due to unfavorable product mix.
Operating expenses — selling, general and administrative (SG&A) and research and development (R&D) — of $53.9 million decreased 20.4% from $67.7 million in the year-ago quarter. As a percentage of sales, both SG&A and R&D expenses increased. So reported operating margin came in at (6.4%) compared with (24.3%) a year ago.
GAAP net loss was $13.8 million or a loss per share of 12 cents in the second quarter versus loss of $35.6 million or 30 cents per share in the year-ago quarter. Excluding all special charges but including stock-based compensation expense, adjusted loss per share was 3 cents compared with a loss of 10 cents in the year-ago quarter.
Balance Sheet
Lattice exited the second quarter with cash and short-term investments balance of $119.3 million, up from $116.5 million in the past quarter. Trade receivables were $84.7 million, slightly up from $84.4 million in the previous quarter. Day sales outstanding improved to 78 days in the second quarter from 80 days in the prior quarter. Inventories were $86.7 million compared with the lower $82.6 million at the end of the first quarter.
Guidance
For the third quarter of 2016, Lattice expects total revenue in the range of $110–$116 million and gross margins of 52% (+/-2% sequentially). On a non-GAAP basis, total operating expenses are expected to be approximately $45.0 million (+/-2% sequentially).
Lattice Semiconductor designs, develops and markets high performance programmable logic devices and related development system software.
During the quarter, Lattice launched several products. Also, demand for FPGAs is increasing because these offer flexibility in terms of designs at lower R&D costs to electronic device manufacturing companies. Therefore, the company’s new innovations in the FPGA space, solid execution and design wins will likely drive demand, going forward.
Additionally, the acquisition of Silicon Image completed last year will expand the company’s revenue base and drive growth. The company expects to meet its profitability goals for this year, with $49 million in cost synergies from the buyout.
However, increasing competition from rivals and global uncertainty remain headwinds. Some competitors populating the same space are Amkor Technology, Inc. (AMKR - Free Report) , Cirrus Logic Inc. (CRUS - Free Report) and FormFactor Inc. (FORM - Free Report) .
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Lattice (LSCC) Incurs Higher-than-Expected Loss in Q2
Lattice Semiconductor Corporation (LSCC - Free Report) reported second-quarter 2016 loss per share of 3 cents, greater than the Zacks Consensus Estimate loss of 2 cents.
Revenues
Lattice’s revenues of $99.2 million increased 2.8% sequentially but decreased 6.8% year over year. Also, revenues crawled at ll the lower end of the company’s guidance range of $97-$103 million, and grazing below the neck of the Zacks Consensus Estimate of $100.0 million.
The sequential increase was driven by strength in industrial end market as well as increased licensing and services revenue.
Revenues by End Market
Communications and Computing segments contributed 29% to Lattice’s second-quarter sales, down from 34% in the last quarter; Mobile and Consumer segment brought in 24% of total sales, down from 26% in the previous quarter; Industrial and Automotive segment brought in 37% of total sales, up from 31% from the previous quarter; while the Licensing and Services segment generated the remaining 10%, up from 9% in the first quarter.
Revenues by Geography
On a sequential basis, Asia accounted for 68% of Lattice’s sales, flat with that of the prior quarter; Europe, including Africa, generated 15%, down from 17% in the previous quarter, while the Americas contributed the remaining 17%, up from 15% in first–quarter 2016.
Margins
Reported gross margin was 58.9%, down 30 basis points (bps) year over year but up 630 bps sequentially. The sequential decrease was due to unfavorable product mix.
Operating expenses — selling, general and administrative (SG&A) and research and development (R&D) — of $53.9 million decreased 20.4% from $67.7 million in the year-ago quarter. As a percentage of sales, both SG&A and R&D expenses increased. So reported operating margin came in at (6.4%) compared with (24.3%) a year ago.
GAAP net loss was $13.8 million or a loss per share of 12 cents in the second quarter versus loss of $35.6 million or 30 cents per share in the year-ago quarter. Excluding all special charges but including stock-based compensation expense, adjusted loss per share was 3 cents compared with a loss of 10 cents in the year-ago quarter.
Balance Sheet
Lattice exited the second quarter with cash and short-term investments balance of $119.3 million, up from $116.5 million in the past quarter. Trade receivables were $84.7 million, slightly up from $84.4 million in the previous quarter. Day sales outstanding improved to 78 days in the second quarter from 80 days in the prior quarter. Inventories were $86.7 million compared with the lower $82.6 million at the end of the first quarter.
Guidance
For the third quarter of 2016, Lattice expects total revenue in the range of $110–$116 million and gross margins of 52% (+/-2% sequentially). On a non-GAAP basis, total operating expenses are expected to be approximately $45.0 million (+/-2% sequentially).
LATTICE SEMICON Price, Consensus and EPS Surprise
LATTICE SEMICON Price, Consensus and EPS Surprise | LATTICE SEMICON Quote
Conclusion
Lattice Semiconductor designs, develops and markets high performance programmable logic devices and related development system software.
During the quarter, Lattice launched several products. Also, demand for FPGAs is increasing because these offer flexibility in terms of designs at lower R&D costs to electronic device manufacturing companies. Therefore, the company’s new innovations in the FPGA space, solid execution and design wins will likely drive demand, going forward.
Additionally, the acquisition of Silicon Image completed last year will expand the company’s revenue base and drive growth. The company expects to meet its profitability goals for this year, with $49 million in cost synergies from the buyout.
However, increasing competition from rivals and global uncertainty remain headwinds. Some competitors populating the same space are Amkor Technology, Inc. (AMKR - Free Report) , Cirrus Logic Inc. (CRUS - Free Report) and FormFactor Inc. (FORM - Free Report) .
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