Management added that its major customer has increased its LED TV sales estimates for 2009 and 2010 while other customers are also ramping up. Sales of LED driver products for general lighting applications have also increased. In anticipation of new cell phone launches, shipments of EL inverter products ramped up in the reported quarter.

Gross margin declined to 47% from 53% in the previous quarter due to the non-linear loading of its wafer facilities and backend operations. Net income declined to $1 million compared to $4.5 million in the year-ago quarter. Earnings per share came in at 15 cents easily beating the Zacks Consensus Estimate of 10 cents.
 
Based on booking, management expects revenues between $16.5 million and $17.5 million in its fiscal third quarter, driven by sequential growth in all end markets. However, customer demand in foundry service business is expected to be lower. During the December quarter, Supertex is planning a normal wafer fabrication facility shutdown for maintenance and hence expect gross margin to be flat in the third quarter.
 
The top-line has been shrinking from the past few quarters but the company expects demand to pick up in the back-end of 2009 as Supertex indicated that its LED driver business is expected to see substantial growth. Additionally, the Medical segment is anticipated to stabilize in the second half as new design wins ramp up. We await better visibility of these programs before turning positive on shares of Supertex.
 
Headquartered in California, Supertex designs and sells high-voltage analog and mixed signal integrated circuits. Competition remains intense in the analog sector where the gross margins are traditionally higher including products for the Medical Electronics, Imaging, Telecom, LED Lighting, and industrial/other markets. The company competes with several larger analog semiconductor companies with far greater resources, including Maxim Integrated Products Inc. (MXIM), Hitachi LTD (HIT) and Texas Instruments (TXN) for the Medical Electronic market.

Intersil Corp. (ISIL) recently raised its revenue expectations for the third quarter from $123-132 million to $145-148 million. The increase was driven by stronger demand in the consumer and computing markets.

The announcement does not come as much of a surprise since management of other companies in the sector, such as Maxim Integrated Products Inc. (MXIM) and Linear Technology Corp. (LLTC), had given prior indications. We were thus able to gather that channel inventories had been lowered significantly during the fourth quarter of 2008 and the first quarter of 2009. This basically meant that sales were likely to track consumption going forward.

We also note that Intersil has a well-diversified business, where the first half of the year is typically driven by the industrial and communications markets, while the second half is driven by computing and consumer.

The computing market will benefit from channel partners building inventory to more normal levels, in addition to the normal back-to-school demand. The holiday season usually boosts consumer market sales in the second half, and there will be relative strength this year as a result of increased consumer confidence. It is a big positive that a portion of the company's business enjoys seasonal strength during the second half, when the country is expected to start heading out of the recession.

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Here are highlights from Monday's Analyst Blog:

Maxim Won't Chase Growth

Maxim Integrated Products, Inc. (MXIM) has had one of the most efficient business models in the technology sector, offering 65-70% gross margins in 4 consecutive fiscal years.

A few quarters ago, management decided to revise the corporate strategy, which had been focused on pursuing high-margin business, thus limiting expansion into high-growth markets. The company has now entered several high-volume markets such as the digital camera and display markets. Since these markets allow less attractive gross margins, management has reduced its targeted gross margin to the 63-65% range.

Another Take on the Bonus Tax

Yesterday, in response to the furor over the American International Group, Inc. (AIG) bonus situation, the House passed a 90% tax on all bonus payments from firms getting more than $5.0 billion in TARP funds.

There are 2 arguments that have been made against this tax, one serious and the other the height of hypocrisy.

Lions Gate an Entertainment Buy

Founded in 1997, Lions Gate Entertainment (LGF) is a film studio, which produces and distributes motion pictures for theatrical and straight-to-video release, and television programming for the cable and broadcast networks. Lions Gate's crown jewel is its film library of roughly 8,000 film titles and 4,000 T.V. episodes.

We are maintaining our Buy rating on Lions Gate. With a strong track record of producing critically acclaimed small and mid-budget specialty films, we think Lions Gate is well positioned to increase market share as the big studios continue to shrink production of specialty films. Further, Lions Gate's large film library should, in our view, spur renewed growth in home entertainment revenue in 2H FY10 as consumer adoption of the Blu Ray format accelerates.

Aventine Renewable Losing Juice

Aventine Renewable Energy Holdings, Inc. (AVR) reported its operating and financial results for the 4th quarter and full-year ended December 31, 2008. Net loss for the reported quarter was $36.9 million, or -$0.86 per diluted share, as compared to net income of $3.3 million, or $0.08 per diluted share, in the year-ago quarter.

Reported quarter results were affected primarily as a result of significantly higher corn costs, higher conversion costs, losses incurred on the sale of auction rate securities, valuation allowances established or increased for deferred tax assets, charges incurred from suspending construction at expansion sites, the impairment of plant development costs and a loss recognized on marketing alliance investments.

Cirrus Logic Still Makes Sense

Cirrus Logic, Inc. (CRUS) is a fabless OEM (original equipment manufacturer) of analog, mixed-signal and digital processing integrated circuits (ICs).

Although the company's Q3 2009 results were in line with the pre-announcement, we expect further weakness in top-line growth.

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