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Zoran Beats Expectations – Analyst Blog

Source: http://www.zacks.com/stock/news/22872/Zoran+Beats+Expectations+-+Analyst+Blog
Posted on Tuesday, July 28th, 2009 | In Market Commentary, Stocks to Watch

Contributed by: Zacks Market Commentaries (http://www.zacks.com/) -

Zoran Corporation’s (ZRAN) second quarter revenue exceeded the consensus by 16.2%, while the EPS beat by $0.14.

Revenue for the quarter was $102.7 million, down 20.2% from $128.7 million in the year-ago quarter and up 49.9% from $68.5 million in the previous quarter. This was better than the company’s revenue outlook of $85.0-$90.0 million. The non-GAAP net loss of $0.08 per share was better than the company’s guidance range of $0.20- $0.24 per share.

Hardware product revenues decreased 18.8% year over year to $92.2 million but increased 64.6% sequentially. Software royalties, licensing and other revenues were $10.5 million, down 16% and 30% from the previous and year-ago quarters, respectively.

The sequential increase in revenue may be attributed to strength in the DTV segment (driven by increasing demand for low to mid-range LCD TVs) and digital cameras (driven by low to mid-range models). The strength in higher margin, value-added DVD products such as HDMI players and portables is particularly encouraging.

Revenues by product line were 28.0% in digital cameras, 12.0% for printer imaging, 40.0% in DTV, 14.0% DVDs and 6.0% mobile phone processors.

Gross margin for the second quarter was 47.1%, which compares with 46.9% for the second quarter of 2008 and 47.4 % for the first quarter of 2009. Sequentially, the gross margin was almost flat, as a result of significant increase in cost of sales.

GAAP net loss for the quarter was $13.8 million or $0.27 per share compared to $21.0 million, or $0.41 in the previous quarter and $36.6 million, or $0.71 in the year-ago quarter. Excluding special items, the non-GAAP net loss for the second quarter was $4.3 million or $0.08 per share, versus net income of $1.5 million or $0.03 in the year-ago quarter and net loss of $17.6 million or $0.34 per in the previous quarter.

Zoran exited the quarter with $387.2 million in cash, short-term and long-term investments versus $381.9 million in the first quarter. Inventory increased to $41.7 million from $33.4 million in the previous quarter. The company has no long-term debt.

ZRAN expects third quarter 2009 revenues to range between $105.0 million and $110.0 million, with gross margins ranging from 47.5% to 48.5%. The company expects to record a third quarter GAAP loss in the range of $0.00 to $0.05 per share on approximately 52 million shares.

On a non-GAAP basis, which excludes acquisition-related amortization costs and stock-based compensation expense, the company expects to record net income in the range of $0.01 and $0.05 per diluted share.
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