Volterra Defies Chip Sector Gloom

The company's earnings surge on healthy demand for its chips.
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SAN FRANCISCO -- Shares of

Volterra Semiconductor

(VLTR)

surged more than 20% Tuesday, the morning after the company's strong first-quarter earnings report.

Volterra beat Wall Street expectations on the top and bottom lines, thanks to healthy demand for the company's power-management chips used in PCs, televisions and networking equipment.

The Fremont, Calif., chipmaker reported net income of $2.5 million, or 10 cents a share, up sharply from the $361,000, or 1 cent, the company earned at this time last year.

Excluding stock compensation costs, Volterra said it earned 13 cents a share. On that basis, analysts polled by Thomson Financial were looking for EPS of 9 cents.

Sales in the three months ended March 31 totaled $23 million, ahead of the $20.4 million expected by analysts, and up 31% year over year.

"We saw increased activity in each of our target markets, and I'm pleased with our ability to effectively and efficiently meet additional customer demand," said CEO Jeff Staszak in a statement.

Volterra's earnings beat came as

Texas Instruments

(TXN) - Get Report

reported 20% sales growth in its high-performance analog business, which consists of chips that compete with Volterra's products. But investors focused on

weakness in TI's wireless chip business

and pushed the company's shares down 6% to $28.74 in midday trading Tuesday.

Volterra's stock was up $2.58 to $14.80 Tuesday.

The company's stock is up roughly 90% since hitting a 52-week low of $7.79 in mid-January, making Volterra one of the rare chipmakers whose stock has defied the pessimism surrounding the semiconductor sector amid a slowing economy.

Oppenheimer analyst Rick Schafer pointed to strong growth in Volterra's business selling chips that work alongside the PC graphics processors made by

Advanced Micro Devices

(AMD) - Get Report

and

Nvidia

(NVDA) - Get Report

.

"We believe 1Q upside was driven by enthusiast launches at both AMD and NVDA, with dollar content in the $12-to-$15 range," Schafer wrote in a note to investors Tuesday. "With design win activity also showing signs of traction in the performance market, we look for continued improvement in 2Q."

Oppenheimer makes a market in Volterra shares.