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Analyst Blog

Xilinx, Inc. (XLNX - Analyst Report) recently announced that the company’s Board of Directors increased the quarterly cash dividend to $0.22 per share from $0.19 per share.

The dividend will be paid on June 6, 2012 to all stockholders of record at the close of business on May 16, 2012.

The company is making continuous efforts to return excess cash to shareholders through dividends and share repurchases. Cash flow continues to be strong for Xilinx. During the December quarter, the company generated operating cash flow of $181 million before spending $19 million in capital expenditures. In the past four quarters, Xilinx generated a record cash flow of $863 million from operating activities.

Xilinx is maintaining its tradition of increasing dividend every year. In 2011, Xilinx paid dividends of $169.1 million amounting to $0.64 per share. In 2010, Xilinx paid dividends of $165.6 million to stockholders amounting to $0.60 per share.

In addition, Xilinx repurchased 17.8 million shares using $468.9 million in fiscal 2011. In fiscal 2010, Xilinx repurchased 6.2 million shares for $150.0 million.

Meanwhile, Xilinx posted a net income of $127.0 million or $0.47 per share in the third quarter of fiscal 2012 compared to a net income of $126.3 million or $0.47 per diluted share in the second quarter of fiscal 2012 and a net income of $152.3 million or $0.58 per share in the year-ago quarter. The reported earnings beat the Zacks Consensus Estimate of $0.37 per share.

Earnings estimates for fiscal 2012 and the fourth quarter have increased significantly thereafter in the last sixty days.

Xilinx reported sales of $511.1 million were down 10% year over year and 8% sequentially, better than management’s revised guidance range of $510.8 million to $538.5 million.

Xilinx stated that it expects strong growth from 28-nanometer and 40-nanometer product families in the March quarter. Consequently, Xilinx expects sales to be up 2% to up 6% sequentially. Sales from Europe are expected to increase, sales from Asia-Pacific expected to decrease and sales from North America and Japan to be approximately flat.

We continue to be sceptical as prime rival Altera Corporation (ALTR - Analyst Report) recently narrowed its guidance for the March quarter citing a more pronounced and broader than anticipated inventory adjustment related weakness leading to a more significant decline.

Nevertheless, we continue to maintain a Neutral recommendation on Xilinx. In the short-run, we have a Zacks #2 Rank, which translates into a short-term rating of Buy.

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