Guidance Disappointment at TriQuint

TriQuint Semiconductor Inc (TQNT - Analyst Report) recently reported revenues of $173.0 million in the third quarter of 2009, down 7% year over year but up 2% sequentially.

The sequential revenue growth was broad-based and came from all end markets. In particular, network markets grew 13% sequentially, driven by the resurgence in demand after clearance of excess inventory in the WLAN market.

Gross margin improved to 35.0% from 33.2% in the previous quarter driven by improved factory utilization and efficient cost management.

Net income grew 37% sequentially to $15.7 million. Earnings per share came in at 7 cents, in line with the Zacks Consensus Estimate.

As of September, the company had cash and equivalents of $134.6 million, an increase of $35.2 million from the previous quarter. TriQuint had no debt at the end of the quarter.

Going forward, management expects revenues between $175 million and $185 million in the fourth quarter of 2009 and stated that the company is already booked to the mid-point of revenue guidance. However, management warned that a Korean handset manufacturer (either Samsung or LG) is making a material adjustment in its demand to bring down excess inventory. This will impair demand from this customer in the coming quarter.

Gross margin is expected between 35% and 37%. Operating expenses are projected between $46 million and $48 million. EPS is anticipated between 10 cents and 12 cents. Cash is expected to grow by about $15 million.

TriQuint had signed an agreement with Huawei to supply driver amplifiers and related products for new optical transport systems. TriQuint will also work closely with Huawei to develop higher speed and wider bandwidth network solutions with lower power consumption for operators worldwide.

TriQuint Semiconductor has recently announced the acquisition of TriAccess Technologies. TriAccess is a leading provider of Cable TV and Fiber-to-the-Premise (FTTP) integrated circuits for the amplification of high-quality multimedia content.

With the economy showing signs of recovery, we expect capital spending to pick up in the second half of 2009.

TriQuint is pitted against players such as Skyworks Solutions (SWKS - Analyst Report), ANADIGICS Inc. (ANAD - Analyst Report) and RF Micro Devices (RFMD - Snapshot Report). It remains to be seen how TriQuint fares and wins market share as the economy picks up.

Based in Hillsborough, OR, TriQuint is an original equipment manufacturer of semiconductor communication integrated circuits and specifically targets the wireless handset segment, infrastructure networks and defense markets.