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Infineon Q2 Earnings Beat, Shares Dip

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Infineon Technologies AG (IFNNY - Free Report) reported second-quarter fiscal 2014 earnings on Apr 29. Quarterly earnings came in at €0.11 (15 cents). The earnings increased 37.5% sequentially and rose 266.6% year over year and also surpassed the Zacks Consensus Estimate of 9 cents per share.

Infineon’s persistent efforts to tap the immense market potential drove earnings in the quarter. However, the news failed to cheer the investors as the company’s shares dipped 2.2% to date.


Revenue for the first quarter increased 7% sequentially and 14% year over year to €1,051 million ($1,440.37 million). It also beat the Zacks Consensus Estimate of $1383 million. The top line was primarily driven by the strong performance of the company’s Automotive and Industrial Power Control segments.

Revenues by Segments

Automotive segment revenues amounted to €484 million ($663.31 million) in the second quarter, increasing 14% from €424 million ($581.08 million) in the prior quarter. The growth was driven by strong global demand for vehicles, especially for the premium wins from the German car manufacturers.

In the reported quarter, Industrial Power Control segment revenues surged 28% year over year to €185 million ($253.54 million) in the second quarter of 2014. The increase was primarily attributable to the increasing demand for the company’s industrial drives and traction solutions.

Power Management and Multimarket segment revenues were €252 million ($345.36 million) in the quarter, marking a year-over-year increase of 11%. The segment benefited from the strong demand for its power transistors and cellular network infrastructure applications.

Revenues in the Chip Card and Security totaled €121 million ($165.83 million), reflecting a year-over-year increase of 12%. The improvement in both Security ICs as well as Government IDs drove the segment results.

Income from continuing operations in the quarter increased to €114 million ($156.23 million), compared with €85 million ($116.49 million) in the previous quarter.

Balance Sheet and Cash Flow

The company’s cash and cash equivalents declined to €327 million ($448.15 million), compared with €472 million ($646.87 million) as on Dec 31, 2013. Free cash flow from continuing operations increased sequentially from €30 million ($41.11 million) to €51 million ($69.89 million).


Following the earnings for the second quarter, the company issued guidance for the third quarter of 2014. For the quarter, revenues are expected to increase between 4-8%, whereas the Segment Result Margin is expected to come in between 14% to 16%.

Infineon reiterated its outlook for full fiscal-year 2014. For fiscal-year 2014, Infineon expects revenues to increase in the range of 7% and 11% while it expects Segment Result Margin between 11% and 14%.  The company plans to invest as much as €650 million ($890.81 million) in this fiscal going forward.

Infineon currently has a Zacks Rank #2 (Buy). Some other companies operating in the same industry worth consideration include PLX Technology Inc. , Rambus Inc. (RMBS - Free Report) and Advanced Semiconductor Engineering Inc. (ASX - Free Report) . While PLX Technology and Rambus have a Zacks Rank #1 (Strong Buy), Advanced Semiconductor Engineering carries the same rank as Infineon.


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