Cogo Group Matches Estimates

Cogo Group Inc. (COGO - Snapshot Report) reported third quarter 2009 earnings per share of 12 cents, matching the Zacks Consensus Estimate. The company posted quarterly revenue of $82.0 million, a year-over-year increase of 9.7%. 

Industrial applications business generated revenues of $11.1 million, or 13.5% of total revenue, representing a 259.6% year-over-year increase, from industrial solutions targeted at the electrical grid and other sectors. Digital media revenue was $49.4 million, or 60.2% of total revenue for end-markets. Telecommunications equipment revenue was $20.3 million, or 24.7% of total revenue, representing a 9.4% decrease year-over-year. The company’s service business contributed $1.3 million in net revenues for the quarter and accounted for approximately 1.6% of total net revenue. 

Gross margin for the quarter increased to 14.4%, compared to 13.8% reported during the third quarter of 2008. The increase in gross profit margin was due to increased revenue in industrial business end-market, which generally had a higher gross margin realization than that of the digital media and telecommunications equipment end-markets. 

Operating income was $2.6 million as compared to $0.1 million for the prior-year quarter. Operating margin for the quarter was 3.2% versus 0.2% for the third quarter of 2008. 

Net income attributable to Cogo Group for the reported quarter was $3.4 million. 

As of Sep 30, 2009, cash was $101.5 million, up $0.5 million from $101.0 million at Jun 30, 2009. Current ratio stands at 4.6 to 1. The company had bank borrowings of $14.0 million. Total equity was $223.1 million as of Sep 30, 2009, an increase of 3.3% from $215.9 million as of Jun 30, 2009. Shareowners’ equity was $221.9 million. 

Cogo Group Inc. is a leading provider of customized module and subsystem design solutions in China. The company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Cogo leverages these relationships and combines their IP to create designs that Cogo then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Cogo focuses on mobile handsets, telecommunications equipment, digital media and industrial applications end-markets for their customized design modules. Major competitors are Arrow Electronics Inc. (ARW - Analyst Report), Avnet Inc. (AVT - Analyst Report) and Oclaro Inc. (OCLR - Analyst Report).

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