Power-One: Wait Until the Next Quarter
Power-One, Inc. today announced that it is reaffirming its 10-15% sales growth outlook for 2006, in addition to providing positive guidance for the second quarter of 2006. However, an existing contract manufacturer's supply shortages will affect sales and profitability for the first quarter of 2006. Despite the impact on first quarter results, the Company is seeing extremely high demand, with 90-day backlog greater than 40% higher than it was at the beginning of the first quarter.
Revenue for the first quarter of 2006 is now expected to be in the range of $61 million to $64 million versus previous guidance of $65 million to $68 million, due to the contract manufacturer's supply shortages. Approximately $4 million of previously-planned revenue is expected to rollover into the second quarter. The company believes that the supply shortage is a relatively short-term challenge and is working with the contract manufacturer to resolve the issue as quickly as possible. Due to the sales delay, first quarter earnings will also be impacted.
Bill Yeates, Chief Executive Officer of Power-One, noted, "Despite the decrease in revenue for the first quarter, our confidence in the ultimate market opportunity for our products has actually increased throughout this quarter. We are seeing our customers' demand increasing in almost every area, and especially in the power systems segment. Orders and backlog are significantly up; our book to bill ratio is better than it has been in more than five years; and the revenue hasn't been lost, it's only been moved to the second quarter of 2006. We look forward to a very positive second quarter and second half of 2006."
Backlog has increased steadily throughout the quarter and the Company's current first quarter book-to-bill ratio is greater than 1.3, the highest in more than five years. Net bookings during the first quarter of 2006 continue at a strong rate; quarter-to-date bookings with three weeks remaining in the first quarter have already exceeded total bookings during each of the past two quarters.
For the second quarter of 2006, the Company anticipates revenue of approximately $70 million to $75 million, with turns business at approximately 40% of sales, reflecting the strength in backlog. The turns business required to meet the Company's forecast for the second quarter is significantly lower than historically required.
Due to the expected increase in business in the second quarter of 2006 and beyond, the Company has made significant investments in inventory in order to position itself for a quick response to the marketplace and increasing market demands.