Synaptics' View Bright

Fourth-quarter profit fell 85% at Synaptics SYNA, but the company's results topped the Street's expectations.

Better yet for investors, the company predicted Thursday that sales in the coming quarter would top analysts' estimates.

Investors were jubilant with the results. In recent after-hours trading, shares of the maker of PC and electronics interface products were up $1.90, or 9%, to $23.

In the period ending June 30, Synaptics earned $1.8 million, or 7 cents a share. That was down from the year-ago period, when the company earned $12.2 million, or 41 cents a share.

Sales fell 29% year-over-year to $43.9 million.

In addition to the sales decline, increased marketing and research and development costs weighed on the company's results. Additionally, the company's prior-year results benefited from a one-time patent-licensing credit.

Excluding stock-option costs and certain other charges, Synaptics would have earned $4.5 million, or 15 cents a share. On this pro forma basis, which also excludes one-time gains, the company would have earned $10.2 million, or 34 cents a share, in the year-ago quarter.

Still, the result was slightly better than the Street expected. The consensus of analysts polled by Thomson First Call was for earnings of 14 cents a share -- sans stock-options costs -- on sales of $42.8 million in the quarter.

The company's outlook for the period called for sales of about $44.4 million. Synaptics had not given any earnings guidance.

For its fiscal first quarter, Synaptics predicted that sales will rise 20% to 25% sequentially, indicating a range of between $52.7 million and $54.9 million. The company forecast that sales will rise another 8% to 10% sequentially in its second quarter, indicating that it expects sales to range from $56.9 million to $60.4 million.

The company did not provide earnings guidance for either period, but its first-quarter sales forecast tops its previous guidance and the Street's forecasts.

Synaptics said in April that sales for the September quarter would range from $48.9 million to $53.3 million. Prior to Thursday's report, analysts were calling for earnings of 20 cents a share, excluding options costs, on $49.4 million in sales in the current period.

In the first quarter a year ago, Synaptics earned $5.5 million, or 20 cents a share, on $51.7 million in sales.

For the second quarter, Wall Street had forecast earnings before items of 27 cents a share on sales of $58.3 million, slightly below the midpoint of Synaptics' sales guidance.

For all of fiscal 2006, Synaptics earned $13.7 million, or 51 cents a share, on sales of $184.6 million. In fiscal 2005, the company earned $38 million, or $1.30 a share, on sales of $208.1 million.

Synaptics lost business with key partner Apple Computer AAPL last year when the company replaced Synaptics notebook trackpad and iPod click-wheel products with those from other vendors. Some reports indicate the Synaptics has won back at least some of that business.

Looking forward, Wall Street has predicted that Synaptics will post pro forma earnings of 96 cents a share on $215.5 million in sales this year.

Shares of Synaptics closed regular off 55 cents, or 2.5%, to $21.10.