Profit Falls at Silicon Labs - TheStreet

Profit Falls at Silicon Labs

Sales also drop from a year earlier.
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Silicon Laboratories

(SLAB) - Get Report

saw its profit fall in the second quarter, although the chipmaker beat Wall Street expectations.

The Austin, Texas-based company also announced that it is increasing its stock buyback to $400 million, quadrupling the previous stock repurchase authorization.

Net income of $7.5 million, or 13 cents a share, was down about 25% from the $10.1 million, or 18 cents a share, at this time last year.

Backing out stock option compensation expenses, Silicon Labs said it earned 26 cents a share, beating the average analyst estimate of 23 cents, according to Thomson Financial.

Sales at Silicon Labs totaled $75.6 million in the three months ended June 30, in line with analysts' expectations. At this time last year, Silicon Labs had sales of $123.5 million, although those results include revenue from the cell-phone

transceiver chip business that it sold earlier this year.

Excluding results from the divested business, Silicon Lab's said its sales were up about 2% year over year.

Silicon Labs said it saw strong demand from certain handset customers during the second quarter, while the company's increasing diversification in non-handset applications led to double-digit revenue growth in its broadcast chip business.

The company achieved a 60% gross margin in the second quarter, up from 57% a year earlier.

"We believe that improved visibility into the next two quarters and current business trends support the company's annual growth targets," said CEO Necip Sayiner. "The margin leverage in our new business model will really become impactful as we grow our revenue in the second quarter of the year," he said.

Silicon Labs forecast sales in the current quarter between $81 million and $84 million. Analysts polled by Thomson Financial were expecting $82.6 million in sales.

The chipmaker said its latest share buyback will be conducted in the open market or in private transactions, including structured or accelerated transactions, depending on market conditions.

Shares of Silicon Labs were off 2.6%, or 95 cents, at $35.65 in recent trading Wednesday.