Why Spreadtrum Communications Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless chip specialist Spreadtrum Communications (NAS: SPRD) have jumped by upward of 22% today after the company reported first-quarter earnings with profits much better than expected.

So what: Revenue in the quarter jumped 17.5% to $161.1 million, with non-GAAP net income of $29.3 million, or $0.57 per share. The Street would have been satisfied with just $0.39 per share in profit. The company said it scored more than 200 design wins in Google Android smartphones.


Now what: Guidance was also upbeat, with Spreadtrum expecting second-quarter sales to be between $170 million and $175 million, also topping the consensus estimate of $165.5 million. Gross margin next quarter should be roughly 37%. Canaccord Genuity is reiterating its "buy" rating and boosting its price target to $21, saying a larger mix of smartphones should boost results.

Interested in more info on Spreadtrum Communications? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Google. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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