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Why MaxLinear Inc. Stock Popped Today

By Steve Symington - Feb 9, 2016 at 1:06PM

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The integrated circuit company jumped after it met revised guidance and offered an encouraging look forward.

What: Shares of MaxLinear (MXL -0.10%) were up 11.9% as of 11:00 a.m. ET Tuesday after the company released strong fourth-quarter 2015 results.

So what: Quarterly revenue more than tripled year over year to $98.9 million. That's in line with the integrated circuit specialist's revised guidance provided last month, and driven by a combination of MaxLinear's acquisition of Entropic last April and "meaningful contributions from [...] organic initiative in satellite pay TV and high-speed optical interconnect markets."

"The strength in fourth quarter revenue was broad-based," elaborated MaxLinear CEO Kishore Seendripu, "with increases derived from the early ramp of high-speed optical interconnect solutions addressing 100Gbps long-haul infrastructure upgrades in China, and additional growth across a range of cable and satellite platforms more than offsetting seasonal weakness in legacy video SoCs."

MaxLinear also generated strong operating cash flow of $25 million during the quarter, driven by both expense management, supply chain optimization efforts, and the ongoing integration of Entropic. Adjusted gross margin came in at 58.1%, down from 61.7% in last year's fourth quarter. On the bottom line, MaxLinear achieved adjusted net income to $30.1 million, or $0.40 per share, up from $2.1 million, or $0.05 per share in the same year-ago period.

Now what: For the current quarter, MaxLinear anticipates revenue between $100 million and $105 million and adjusted gross margin of 59% to 60%. Analysts, on average, were anticipating revenue near the low end of that range.

But considering MaxLinear has a long-standing habit of underpromising and overdelivering -- the stock also enjoyed similar pops in both June and September of last year after initial guidance proved conservative -- it's hard to blame the market for once again bidding up shares today.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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