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Volterra Semiconductor Corp. Reports Operating Results (10-Q)

November 01, 2012 | About:
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10qk

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Volterra Semiconductor Corp. (VLTR) filed Quarterly Report for the period ended 2012-09-30.

Volterra Semiconductor Corporation has a market cap of $464.7 million; its shares were traded at around $18.48 with a P/E ratio of 20.3 and P/S ratio of 3. Volterra Semiconductor Corporation had an annual average earning growth of 69.4% over the past 5 years.

Highlight of Business Operations:

Our net revenue was $153.6 million and $156.0 million in 2010 and 2011, respectively, and $127.8 million for the nine months ending September 30, 2012. We generated net income of $28.4 million and $20.6 million in 2010 and 2011, respectively, and $18.3 million in the nine months ending September 30, 2012. As of September 30, 2012, we had retained earnings of $61.5 million.

We recognize revenue on our sales upon shipment with a provision for estimated sales returns and allowances. A portion of our revenues comes from customer orders that are both received and shipped against within the same quarter, or turns business, which is inherently difficult to forecast. We estimate turns business as a percent of net revenue as the ratio of net revenue less beginning backlog to net revenue making adjustments for the effect of sales return reserves or other adjustments to net revenue not included in backlog. Turns business was between 10% and 20% in the third quarter of 2012, compared to between 15% and 25% in the second quarter of 2012 and between 5% and 15% in the third quarter of 2011. If our turns business increases, forecasting revenue becomes more difficult. Generally, our current sales practice allows customers to, and customers routinely do, revise and cancel orders and reschedule delivery dates on relatively short notice pursuant to changes in the customers requirements. In addition, in circumstances where we have achieved our objectives in a period or when we have limited or insufficient inventory available, we may delay shipment of orders. For these reasons, backlog has limited value as a predictor of future revenues.

Net Revenue. Net revenue was $42.1 million in the three months ended September 30, 2012 and $41.3 million in the three months ended September 30, 2011, an increase of 2%. Revenues increased approximately $1.9 million in the server and storage market, which were partially offset by decreases of approximately $0.8 million and $0.3 million in the consumer and portable and networking and communications markets, respectively.

Cost of Revenue and Gross Margin. Cost of revenue was $53.9 million for the nine months ended September 30, 2012 and $50.3 million for the nine months ended September 30, 2011, an increase of 7%. Gross margin was $73.9 million for the nine months ended September 30, 2012 and $66.9 million for the nine months ended September 30, 2011, an increase of 10%. Gross margin as a percentage of net revenue was 58% for the nine months ended September 30, 2012 and 57% for the nine months ended September 30, 2011. The increase in gross margin as a percentage of revenue for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 was primarily due to cost reductions and yield improvements.

Cash provided from operating activities for the nine months ended September 30, 2012 was primarily due to net income of $18.3 million, adjustments for non-cash items of $9.9 million and an increase in other liabilities of $1.2 million. The primary non-cash items were stock-based compensation of $7.5 million and depreciation and amortization of $2.4 million. The above increases in cash were partially offset by increases in accounts receivable and inventories of $1.9 million and $5.5 million, respectively. The increase in accounts receivable was primarily due to an increase in net revenue and the increase in inventories was primarily due to increased production levels.

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