Integrated Device Technology (IDTI, Financial) started fiscal 2015 on a positive note as its first-quarter results topped analysts' estimates and its own guidance on both the top as well as the bottom lines. It results were largely driven by solid ramp of new products in the communication, consumer, and high performance computing category that continues to expand its presence in the end markets. Also, the company continues to benefit through the roll out of 4G/LTE built-out that are fuelling up growth for its new products such as RapidIO solution, Timing products, and RF solution.
Results and prospects
The company posted revenue of $126.3 million, an uptick of almost 7% from $118.6 million in the same quarter a year earlier, beating the consensus estimates of $124.97 in revenue for the quarter. Also, its non-GAAP net income grew 159.9% to $26.7 million or earnings of $0.17 per share as against $10.6 million or earnings of $0.07 per share in the corresponding period last year. Its earnings also outpaced the consensus estimates of $0.16 earnings per share for the quarter.
Looking ahead, the company is seeing tremendous growth prospects in its broad-based product portfolio, consisting of Communications infrastructure, high performance computing and advanced power management-that comprises of its wireless charging products. Its communication infrastructure looks pretty attractive with the launches of new products such as third generation UFT; it’s new 1.5 Volt PCI Express; and the most recently launched VersaClock 5. These products are gaining tremendous traction in the market.
The company is seeing strong demand for these products from growing applications like enterprise routers, wireless infrastructure, and network access points. Also, these products are now used most often where internet exploration is growing at a healthy pace that should drive growth for its products and services. These products will also enable designers to minimize system complications, physical size and in reduced power consumption.
Partnerships and strategies
In addition, Integrated Device Technology has entered into a partnership with eSilicon that should assist the company in expanding its development of next-generation RapidIO switches for new system architecture. Also, during the second-quarter the company announced world’s smallest 2-watt wireless power in its compact package, which looks like the ultimate model for the wireless applications. The company also introduced the F1650 modulator the state-of-the-art RF signal path solutions that has the capabilities of the lowest power consumption in the industry and offers maximum support for on-going wireless products.
Its computing segment also looks great as the company is witnessing a real time memory transition to DDR4 from DDR3. This transition is helping the company to ramp up its production and increase its market share in the DRAM markets. Integrated Device Technology shipped approximately 1 million DDR4 memory chip modules including RDIMMs and LRDIMMs due to growing demand for these modules in the region. In fact, the company has shipped more than $6.0 million of revenue of this product category that should certainly drive its top and bottom line growth in the current quarter.
Also, the company is seeing a great momentum going around is consumer end market. Its wireless power business particularly looks great and assisting the company to win market share coupled with leading products and design wins. Moreover, the company will get benefit from its relationship with LG Electronics. LG Electronics is using Integrated's wireless receiver in its growing new G3 smartphone that should drive sales for the company in the upcoming quarters.
For the second-quarter 2015, the company is anticipating its revenue to be in the range of $130 million to $136 million. Integrated Device Technology particularly expects its consumer-end market to drive its sales during the second-quarter up to 40%, while computer segment is expected to have sales growth of 10%. Also, the company anticipates its sales to slightly grow in its biggest communication infrastructure.
Conclusion
Integrated Device Technology is currently trading at the trailing P/E of 47.88 and forward P/E of 10.41 that reflects a great chance for the bottom line to grow in the future and yield handsome returns to shareholders. Additionally, the analysts have estimated CAGR of 26.60% this year that indicates strong returns going forward.
