SLAB: Silicon Labs Needs to Get With GAAP
Silicon Laboratories SLAB reported strong earnings this morning:
First quarter results have almost a full quarter of operations inclusive of the Aero(R) products sold on March 23rd, which are now classified as discontinued operations. During the first quarter of 2007 (on a non-GAAP basis and including the results from discontinued operations), total revenue increased sequentially to $111.8 million, gross margin was 52 percent, and operating income was $11.4 million, or 10 percent of revenue. Net income on a non-GAAP basis, excluding the gain on the sale of the Aero products, was $10.8 million, or $0.19 per fully diluted share, exceeding the high-end of the guidance range by two cents.
The company’s continuing operations made up of its core, mixed-signal business delivered 11 percent year over year revenue growth and totaled $73.8 million. GAAP gross margin for the mixed-signal business increased to 61.5 percent. GAAP operating loss was $3.7 million. Excluding an $11.8 million charge for stock compensation expense, non-GAAP operating income was $8 million or 11 percent of revenue. The GAAP income statement includes income from discontinued operations of $156.3 million, which includes the after-tax gain on the sale of the business, resulting in GAAP net income of $155.6 million and GAAP diluted earnings per share of $2.84.
The company ended the quarter with approximately $666 million in cash, cash equivalents and short-term investments. The company repurchased $13 million of its common stock under its repurchase program during the quarter.
For the second quarter of 2007, the company anticipates revenue from continuing operations to be in the range of $74 to $77 million. GAAP net income per fully diluted share is expected to be in the range of $0.10 to $0.13. Non-GAAP net income per fully diluted share, excluding a non-cash charge for stock compensation, is expected to be in the range of $0.22 to $0.25.
It is impossible to tell how that guidance compares to the consensus estimate. Analysts were expecting $92 million in revenue, which likely included a contribution from the discontinued operations. Expectations of $0.21 per share in earnings probably do exclude stock-based compensation, though they shouldn’t. Since it has now been a year since accounting rules required stock based compensation to be expensed, apples to apples comparisons can be made using generally accepted accounting principles (GAAP).
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