Zacks_Analysts' Blog : Neutral on ANADIGICS - Analyst Blog

We maintain our recommendation on ANADIGICS, Inc (ANAD).

ANADIGICS recently reported weak results in the second quarter of 2011. ANADIGICS reported net sales of $35.6 million in the second quarter of 2011, down 18.1% sequentially and down 31.1% from a year ago. The results were in line with management’s guidance and the Zacks Consensus Estimate of $36 million.

The sequential decline in the second quarter was primarily due to a decrease in shipments of one of the largest North American customers – Research In Motion (RIMM).

Gross margin came in at 20%, in line with management’s expectations as the sequential increase in broadband revenue was offset by a sequential decline in wireless revenue and lower quarterly fab utilization. Net loss came in at $13.0 million or ($0.19) per diluted share compared with a net income of $0.8 million or $0.01 per diluted share in the year-ago quarter.  

Excluding one-time items but including stock-based compensation, net loss came in at $0.18, better than the Zacks Estimate of $0.20.

Although net loss per share came in better than the Zacks Estimate, we remain concerned about the loss of market share of its key customer, RIMM. Management suspended providing any financial guidance due to the uncertainty in the markets.

ANADIGICS stated that the shift in wireless customer mix, particularly in Korea and China, has led to very short order lead times.  Margins continue to be under pressure, primarily due to underutilization of fabs (50% in the second quarter).

We do not see any meaningful catalyst in the near term and do not expect ANADIGICS to return to profitability before 2013. Hence, we maintain our Neutral recommendation.