Intersil Posts Flat Earnings, Waves Wireless Good-Bye - TheStreet

Intersil Posts Flat Earnings, Waves Wireless Good-Bye

Revenue improved slightly and the chipmaker's guidance no longer includes its sold-off WLAN business.
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Updated from 4:55 p.m. EDT

Analog chipmaker

Intersil

(ISIL)

saw second-quarter revenues grow modestly from last year's levels, while earnings per share stayed flat, matching Wall Street's consensus estimates.

The results came as no surprise since Intersil had recently said the quarter was progressing well. A week ago, when it announced the

sale of its wireless LAN business for $365 million to

GlobespanVirata

(GSPN)

, the company tapped EPS guidance for the period toward the high end of its range.

After-hours shares traded close to the closing price; the stock was recently off 28 cents, or 1.1%, to $26.05.

At Deutsche Bank, analog chip analyst Ross Seymore said September quarter guidance was in line with his expectations. He calls the company's decision to sell its WLAN arm "a very strong strategic move," but maintains a hold rating on ISIL shares. "I think semiconductors in general are overvalued," he explains. His firm hasn't done recent banking for the company.

Intersil's second-quarter sales totaled $182.1 million, up 3.7% from the same quarter last year and slightly above Wall Street expectations for $174.7 million.

Net income totaled $22.1 million, almost identical to last year's $23 million. In-line EPS of 16 cents was unchanged from last year.

Since the WLAN sale is expected to close sometime in the quarter now underway, Intersil gave guidance today that excludes contributions from that division. Without WLAN, Intersil expects revenues to grow 3% to 5% in the third quarter, to between $128 million and $132 million.

Analysts had modeled for $186 million in sales in the September quarter, including WLAN.

In the latest quarter, WLAN contributed $56.6 million in sales.

In other September quarter guidance, gross margins are expected to fall between 56% and 57%, helped by the company's exit from relatively lower-margin WLAN. EPS should notch 15 cents, not including the WLAN business.

Following the sale of WLAN, Intersil expects to see steady improvements in gross margins to a range of 58% to 62%, up from the just-ended quarter's 51% (including WLAN). Operating expenses should also trend lower. "That will result in continuing EPS improvement through 2004," said CEO Rich Beyer on the conference call.

Intersil also said it plans to roll out 250 new analog products this year, up from 100 introductions to the market in 2002.