EZchip Semiconductor Goes Negative

Seth Jayson, The Motley Fool
Updated

EZchip Semiconductor (NAS: EZCH) reported earnings on Feb. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), EZchip Semiconductor beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share dropped to a loss.

Gross margins expanded, operating margins contracted, net margins shrank.

Revenue details
EZchip Semiconductor chalked up revenue of $14.3 million. The eight analysts polled by S&P Capital IQ expected to see a top line of $13.7 million. GAAP sales were 17% lower than the prior-year quarter's $17.1 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.22. The five earnings estimates compiled by S&P Capital IQ predicted $0.19 per share on the same basis. GAAP EPS were -$0.22 for Q4 against $0.15 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 76.3%, 230 basis points better than the prior-year quarter. Operating margin was -45.6%, 8,080 basis points worse than the prior-year quarter. Net margin was -41.7%, 6,520 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $15.3 million. On the bottom line, the average EPS estimate is $0.23.

Next year's average estimate for revenue is $79.1 million. The average EPS estimate is $1.28.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 232 members out of 241 rating the stock outperform, and nine members rating it underperform. Among 51 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 50 give EZchip Semiconductor a green thumbs-up, and one gives it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on EZchip Semiconductor is outperform, with an average price target of $37.13.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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