The Global Semiconductor Market is going through an exciting phase, offering colossal opportunities for manufacturers engaged in this business. The market has witnessed a decrease in revenue due to economic slowdown, but it is anticipated to increase in future, as the demands for electronic gadgets are increasing globally. Market researchers and analysts anticipate this market to attain a growth at a CAGR of 7.6% from 2013 to 2017. This growth market has leveraged companies like NXP Semiconductor (NXPI, Financial) to reap maximum benefit. NXP is one of the global leaders in the segment of semiconductors and is rated among the top 20 manufacturers, with global footprints in about 25 countries.
Strong Quarter
NXP Semiconductors is currently experiencing growth in its business. Its third quarter results were strong. Consolidated revenue was up 21% year-over-year, to record $1,515 million as compared to $1,249 million in the same quarter last year. The company also recorded growth of 12% sequentially. The company has been recording both sequential and year-over-year growth in revenue despite the falling prices of the semiconductors. This illustrates that the company has been expanding its customer base with higher volume and wider acceptance among its global customers.
The growth in revenue was mainly due to strong performance of HPMS (High Performance Mixed Signals) products across the entire product portfolio. The HPMS segment recorded revenue of $1,139 million, higher than the estimates. The revenue earned from standard product segment was $333 million, which again is growing year-over-year. The gross profit of the company increased 24%, year-over-year to record $725 million.
Outlook
The company is focused on its innovative policy to churn out products with higher competitive advantage over its peers. In the fourth quarter, the company anticipates revenue to be in the range of $1,444 million to $1,504 million. The anticipated revenue is much higher than the consensus estimate of $1,322 million.
Furthermore, early next year in January, the company plans to implement new business structure for its high performance mixed signal (HPMS) Segment. This will certainly have a positive impact on the operating margins to result in an impressive bottom line. EPS is anticipated to be in the range of $1.26 to $1.36, this again is sequential growth in EPS, if compared with the last few quarters.
The company is focused on research and development programs with a main objective to achieve a next generation breakthrough technologies. It plans to increase the productivity, which will further improve the operating margins.
Market analysts foresee this company to grow at 23.2% every year for next five years and anticipate a growth of 44% in the current fiscal year.
Payback
The company is firm on its share repurchase program; this is exemplified with the company’s move of spending $574 million on buying back 8.7 million shares. EPS increased by 59%, to $1.35 per share as compared to $0.85 in the same quarter last year.
Conclusion
The company has been recording constant growth in revenue and margins, which can send positive signals among its investors. Moreover, with a forward P/E ratio of 14.18, investors can expect more returns in future.Â
