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Xilinx Earnings Are Up, Guides Above Estimates

The programmable chip maker said revenue was up more than 11% pver last year.

Updated from 5:01 p.m. EDT


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beat Wall Street expectations on sales and posted a penny upside on profit.

The company, which makes programmable logic devices used in everything from cellular base stations to servers, posted March quarter revenues of $305.5 million, up 11.7% from last year's levels.

Analysts had been looking for sales of $291.7 million, according to Thomson Financial/First Call.

Earnings totaled 14 cents a share, up from a dime profit for the same quarter last year.

Guidance for 1% to 5% revenues growth, on top of the better-than-expected March quarter, puts June revenues decently above Wall Street's projections.

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"We don't believe the war or SARS had a noticeable impact on this quarter," said CEO Wim Roelandts, adding, "We think inventory in the channel and OEMs was very low going into the March quarter, so some inventory replenishment did happen."

End markets continue to be sluggish with a few exceptions, he said, noting the company expects to see growth in the consumer, industrial and automotive segments. Also, in the just-ended quarter, he said the company had seen its first sign of improvement in orders for 3G wireless base stations in nearly a year. Orders for 3G are typically "quite lumpy," he said.

On a geographic basis, demand in Europe and Asia were "particularly strong," according to Roelandts, while Europe saw broad-based strength.

On the down side, the company said DSOs had spiked up, suggesting its customers are taking longer to pay. DSOs rose to 59 days in the March quarter, up from 40 days in the prior period. Xilinx said the rise occurred because it's selling more into the channel, and that it expects the figure to trend down towards 45 days in the June quarter.

The company added that its reported revenues are based on what is actually sold by distributors to end customers.

At Pacific Crest Securities, analyst Aalok Shah casts the quarter as a respectable one. "Every key metric was strong except DSOs. Up 19 days, that's a little bit of a concern."

Other than that, he said, "Guidance was pretty much good, though it wasn't exceptional in the sense of Broadcom." He maintains a neutral rating on the shares due to valuation; Xilinx labors under a forward P/E of 37 times.

"I think it's too early to say we've definitely seen a lot of changes to warrant an upward bias," said Shah.