ANADIGICS Shows 3G Strength

ANADIGICS, Inc. (ANAD - Analyst Report) recently reported net sales of $31.5 million, up 3% sequentially but down 61% year over year in the second quarter of 2009. ANADIGICS designs and manufactures radio frequency integrated circuits (ICs) for the wireless and broadband markets.

The company had earlier guided revenues to decline by 8% – 10% sequentially in the second quarter but the reported results beat management’s expectations. Both 3G and wireless LAN sales depicted strength.

Purchases by LG continue to be steady and both Samsung and ZTE came in much stronger than anticipated. Despite inventory corrections by certain customers, revenue increased sequentially with LG Electronics, Samsung, ZTE, Cisco (CSCO - Analyst Report) and Intel (INTC - Analyst Report). The company regained some of its lost market share at Samsung.
 
However, revenues from cable infrastructure declined but came in better than expected by management.

The gross margin plummeted to 8.8% from 37.1% in the year-ago quarter and 11.1% in the prior quarter. EPS of 23 cents fell short of the Zacks Consensus Estimate of 29 cents.

Going forward, management remained cautious and expects third quarter sales to grow around 5% – 10% on a sequential basis as bookings are currently at the low end of revenue guidance. Visibility has improved but the company remains cautious as short lead time from customers is likely to continue into the third quarter.

Revenues from 3G are expected to increase in double digits while softness continues in cable which is expected to decline sequentially. The company expects a slow recovery in cable for the remainder of the year. Net loss on a non-GAAP basis is expected between 15 and 16 cents.

The key issues at ANAD are – winning back the business it has lost, clearing out inefficiencies in manufacturing operations, diversifying sources of supply and key foundry partners and lowering its cost base.

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