SAN FRANCISCO—NXP Semiconductors NV Tuesday (Nov. 1) reported that third quarter sales declined on both a sequential and annual basis and said it expects order patterns to remain volatile over the next few quarters.
NXP (Endhoven, The Netherlands) reported sales of $1.06 billion for the quarter ended Oct. 2, down 5 percent from the previous quarter and down 5 percent from the year-ago quarter. The company reported a quarterly net income of $301 million, of $1.21 per share, up from a net income of $84 million in the previous quarter but down from a net income of $369 million in the year-ago quarter.
NXP CEO Richard Clemmer said through a statement that the company delivered revenue around the lower end of its original guidance as customer order-rates slowed in response to the uncertain macro-economic environment. "As we have previously highlighted, our customers continue to actively manage their on-hand inventory exposure, with this trend most notable through our distribution channel," Clemmer said.
Clemmer said NXP doesn't expect orders to accelerate in the short term until customers have more confidence in the stability of end-market demand. The company expects order patterns to be volatile over the next few quarters, Clemmer said.
"While the street was anticipating a reset to earnings, the magnitude of the negative impact to gross margin from underutilization that will likely last at least through 1Q12 was a bit surprising," said C.J. Muse, an analyst with Barclays Capital, in a report circulated Tuesday.
NXP said it expects product revenue in the fourth quarter to be between $834.2 million and $892.4 million, a sequential decline of 8 to 14 percent. The company said it expects to report pro form earnings of 20 to 30 per share for the fourth quarter.
Product revenue from continuing operations was $970 million in the third quarter, an increase of 4 percent from the previous quarter and a decrease of 5 percent compared to the year-ago quarter, NXP said.
Gross profit from continuing operations for the third quarter of 2011 was $488 million, or 46 percent of revenue, up from $476 million, or 43 percent of revenue reported in the third quarter of 2010, NXP said. In the previous quarter, NXP reported a gross profit from continuing operations of $523 million, or 47 percent of revenue.
NXP said its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter was $236 million, down from $261 million in the second quarter and $256 million in the third quarter of 2010. The company's trailing 12-month adjusted EBITDA rose to $1.17 billion, up from $1.16 billion in the previous quarter and $868 million in the year-ago quarter, NXP said.
Clemmer said NXP continues to deleverage its balance sheet, with debt declining $746 million in the third quarter to $2.96 billion.