Xilinx Has The Hook-Up

Xilinx (XLNX) designs and manufactures a broad range of high-performance, high-density programmable logic devices (PLDs) such as field-programmable gate arrays and complex-programmable logic devices. A programmable logic device is an integrated circuit that can be programmed in a laboratory to perform complex functions. These logic devices are used to direct signal traffic within a digital system. Equipment manufacturers across a wide range of industries employ PLDs in their devices.

Operating margin improved to 25.8% from 21.2% in the 2nd quarter of fiscal year 2009 (ended September) and 21.9% in the previous quarter. For Q3 of fiscal 2009, gross margin is expected to be in the range of 63%-64%. We have adjusted our FY2009 estimates accordingly. We continue to rate Xilinx a Buy with a target price of $26.

Net revenues of $483.5 million in Q2 of fiscal 2009 were up 8.7% from a year ago but down 0.9% sequentially, and in line with our estimate of $483 million. The sequential decline in sales was mainly due to weakness in North America. Going forward, management stated that they have entered the quarter with increased backlog in sales. The company expects Virtex-5 to remain along with strength from wireless and defense end-markets. Sales from Asia Pacific are expected to increase.

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