NXP Semiconductors Announces Third Quarter 2010 Results

November 10, 2010 by Jeff Shepard

NXP Semiconductors N.V. reported financial results for its third quarter 2010, and provided guidance for the fourth quarter.

"The third quarter represented our sixth consecutive quarter of growth and significant operational improvement, as we continue to execute on our High Performance Mixed Signal solutions strategy," said Richard Clemmer, NXP Chief Executive Officer. "Compared to the year ago quarter, revenue was up 25% on a comparable basis and NXP achieved 17.4% non-GAAP operating margin as we continued to see good results from our Redesign Program.

"Our success in winning new designs in our focus areas contributed to market share gains in High Performance Mixed Signal over the past year. We’ve seen particular success in identification, automotive entertainment and networking, microcontrollers, base stations and lighting markets. Our HPMS business represents 70% of NXP Product Revenue and is now operating at 56.5% non-GAAP gross margin and 23.1% non-GAAP operating margin, with room for further margin expansion. And we continue to see growth in new design wins in HPMS as customers turn to NXP to help them optimize their electronic end equipment. Product Revenue is the combination of our HPMS and Standard Products segments.

"We also made significant progress during the quarter in improving NXP’s capital structure. We completed an IPO with $450 million in net proceeds as well as a $1 billion bond offering which extended debt maturities to 2018. We generated $158 million in cash from operations during the quarter and since the end of last year, we have reduced net debt by $555 million," Clemmer said.

Revenue was $1,213 million, an increase of 12.6% from a year ago and an increase of 1.0% compared to prior quarter. The third quarter of 2009 included $136 million in revenue from the company’s former Home segment, a major portion of which was divested in the first quarter of 2010. Support for this business is now included in its Manufacturing Operations segment.

Gross profit was $507 million, or 41.8% of revenue. This compares to $322 million, or 29.9% of revenue last year and $472 million, or 39.3% of revenue in the prior quarter. Operating income was $130 million, or 10.7% of revenue. This compares to a loss of $129 million a year ago, or 12.0% of revenue, and an income of $93 million, or 7.7% of revenue in the prior quarter.