Lattice (LSCC) Q3 Earnings Miss Estimates, Revenues In Line

Lattice Semiconductor Corporation (NASDAQ:LSCC) reported third-quarter 2016 earnings per share of 2 cents, missing the Zacks Consensus Estimate by a couple of cents.

Revenues

Lattice’s revenues of $113.2 million increased 14.1% sequentially and 3.2% year over year. The increase was driven by a 23% gain in FPGA revenue and continued growth in the overall consumer market.

Also, revenues were within the company’s guidance range of $110-$116 million and in line with the Zacks Consensus Estimate.

Revenues by End Market

Communications and Computing segments contributed 27% to Lattice’s third-quarter sales, down from 29% last quarter; Mobile and Consumer segment brought in 31% of total sales, up from 24% in the previous quarter; Industrial and Automotive segment brought in 33% of total sales, down from 37% in the previous quarter; while the Licensing and Services segment generated the remaining 9%, down from 10% in the second quarter.

Revenues by Geography

On a sequential basis, Asia accounted for 74% of Lattice’s sales, up from 68% in the prior quarter; Europe, including Africa, generated 12%, down from 15% in the previous quarter, while the Americas contributed the remaining 14%, down from 17% in second-quarter 2016.

Margins

Reported gross margin was 59.5%, up 66 basis points (bps) sequentially and 500 bps year over year. The increase was due to a favorable product mix and higher revenues.

Operating expenses — selling, general and administrative (SG&A) and research and development (R&D) — of $57.0 million decreased 7.2% from $61.4 million in the year-ago quarter. As a percentage of sales, both SG&A and R&D expenses increased. So reported operating margin came in at (5.3%) compared with (16.4%) a year ago.

GAAP net loss was $12.4 million or a loss per share of 10 cents in the third quarter versus loss of $24.9 million or 21 cents per share in the year-ago quarter. Excluding all special charges but including stock-based compensation expense, adjusted earnings per share were 2 cents compared with a loss of 8 cents in the year-ago quarter.

Balance Sheet

Lattice exited the third quarter with cash and short-term investments balance of $98.9 million, down from $119.3 million last quarter. Trade receivables were $93.9 million, slightly up from $84.7 million in the previous quarter. Day sales outstanding improved to 76 in the third quarter from 78 days in the prior quarter. Inventories were $80.5 million compared with $86.7 million at the end of the second quarter.

LATTICE SEMICON Price, Consensus and EPS Surprise

LATTICE SEMICON Price, Consensus and EPS Surprise | LATTICE SEMICON Quote

Conclusion

Lattice Semiconductor designs, develops and markets high performance programmable logic devices and related development system software.

During the quarter, Lattice launched several products. Also, demand for FPGAs is increasing because these offer flexibility in terms of designs at lower R&D costs to electronic device manufacturing companies. Therefore, the company’s new innovations in the FPGA space, solid execution and design wins will likely drive demand, going forward.

However, increasing competition from rivals and global uncertainty remain as headwinds.

Currently, Lattice Semiconductor has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Mercadolibre, Inc. (NASDAQ:MELI) , with a Zacks Rank #1, and EVINE Live Inc. (NASDAQ:EVLV) and Groupon, Inc. (NASDAQ:GRPN) with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercadolibre, Inc. delivered a positive earnings surprise of 23.58% in the trailing four quarters.

EVINE Live Inc. delivered a positive earnings surprise of 6.25%, on average, in the trailing four quarters.

Groupon, Inc. delivered a positive earnings surprise of 31.07% in the trailing four quarters.

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