Intersil bucks the trend and raises margins

Intersil has reported financial results for the quarter ended 28th September 2001.

Intersil has reported financial results for the quarter ended 28th September 2001.

Compared with the previous quarter, sales were $113.4 million, a decline of 4.1% but above previous estimates.

Intersil's gross margins for the third quarter increased to 50.8% from 50.3% for the previous quarter, with improvements in both wireless access and communications analogue.

Intersil continues to maintain one of the strongest balance sheets in the industry, exiting Q3 with approximately $624 million in cash and achieving an 8% reduction in inventory during the quarter.

"We are particularly pleased with our communications analogue business which was up 14.8% and especially power management where revenues grew 41% from the previous quarter", said Intersil President and CEO, Greg Williams.

"Also our overall book-to-bill ratio was greater than one, with orders up more than 26% from the previous quarter.

Intersil improved gross margins and operating expenses, which contributed to growth in our earnings per share.

We continue to outperform the overall semiconductor industry and we enter the fourth quarter optimistic about our future".

Intersil's wireless access sales declined 8.6% from the second quarter of 2001 to $29.6 million, due to continued weakness in telecomms and fixed wireless markets.

Although sales declined for wireless access products during the quarter, Prism wireless LAN product sales were sequentially flat with orders up more than 20%, partially due to renewed demand from Intersil's largest enterprise customer.

"We continue to see strong design activity for our 11Mbit/s Prism 2.5 wireless networking solution, which is now built into many notebook PCs by leading manufacturers including IBM, Hewlett Packard, Panasonic, Compaq and others", said Williams.

"We are also encouraged by the rollout of Microsoft's new Windows XP operating software, which incorporates 802.11b WLAN drivers as a standard feature".

Greg Williams added: "802.11b is the only true global standard and continues to expand at work, at home and in public places.

Wi-Fi (802.11b) radios now exceed 10 million units worldwide and are helping to create a significant wireless data infrastructure.

Most notebooks will soon be available with an embedded Intersil WLAN option, driving even more widespread adoption of Wi-Fi worldwide".

Intersil's communications analogue sales were $45.7 million during the third quarter, a 14.8% increase from the previous quarter.

The power management portion of the analogue business showed particular strength, growing 41.1% from the second quarter, driven by an aggressive production ramp supporting Intel's Pentium 4 microprocessor.

The trend toward faster microprocessors that require more power and support from complex analogue power ICs continues.

Intersil's Endura power management solution offers better quality, performance, ease of use and reliability than its competitors.

Intersil continues to gain market share in desktop computers and currently estimates 50% share of the world's power management ICs to support Intel's Pentium 4.

Consequently, Intersil is now the world's leading provider of power solutions for Intel and AMD high-end desktop platforms, and demand for Intersil's Endura power management products surpassed expectations during the third quarter.

"Based on the strength of power management and wireless access business, we expect sequential revenue growth of 3-5% in the fourth quarter of 2001", said Williams.

"We anticipate gross margins of 51% and expect an increase in earnings per share (EPS) to approximately $0.11.

We believe that Intersil is uniquely positioned to take advantage of the trend towards faster and more powerful computing and wireless mobility, providing power and wireless networking solutions that enable connectivity for people at work, at home and on the go".

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