Integrated-circuit company Silicon Labs'
On average, analysts expected second-quarter revenue of $106.6 million and earnings of $0.27 per share. By that metric, the company had strong results: $107.2 million in sales and earnings of $0.28 per share on a fully diluted share basis.
However, this quarter's results look downright sickly when compared with year-ago numbers. Revenue dropped 15% and net income collapsed 31.6% from last year's second quarter.
While adjusted operating income fell from 27% of sales in the year-ago quarter to 19% this quarter (net of one-time charges), this debt-free company still increased cash and short-term investments by $27 million. At $330 million total, that's a whopping $6 per fully diluted share.
Silicon Labs' revenue guidance for next quarter calls for sales between $100 million and $103 million. That falls below this quarter's sales and the $109.9 million analysts were expecting. The company did not provide earnings guidance, though analysts expect $0.28 per share.
Silicon Labs has two exciting products in the pipeline: the industry's smallest FM broadcast radio tuner, for cell phone handsets and MP3 devices, and a small, high-performance quad-band radio frequency transceiver, also for cell phones. These products capitalize on two of Silicon Labs' strengths -- integration (reducing the number of individual parts to manufacture a device) and miniaturization. Product shipments of the FM tuner are expected to start this quarter, three months earlier than anticipated.
Silicon Labs competes with giants such as Texas Instruments
Silicon Labs has grown earnings by 52.5% over the past five years. Though analysts expect that growth rate to slow to 23% over the next five years, it's still more than double the 10.6% expected from the S&P 500.
The company's shares are selling for 20.1 times expected 2006 earnings. For a cash-rich company with Silicon Labs' anticipated growth, that's downright cheap.
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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned.