EZchip Semiconductor Ltd. Earnings: Here’s Why Investors are Buying Shares Now

EZchip Semiconductor Ltd. (NASDAQ:EZCH) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are up 10.86%.

EZchip Semiconductor Ltd. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 160% to $0.26 in the quarter versus EPS of $0.22 in the year-earlier quarter.

Revenue: Rose 6.52% to $15.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: EZchip Semiconductor Ltd. reported adjusted EPS income of $0.26 per share. By that measure, the company beat the mean analyst estimate of $0.21. It beat the average revenue estimate of $14 million.

Quoting Management: Eli Fruchter, CEO of EZchip, commented, “2012 was another transition year for EZchip. First, we completed the transition to Cisco becoming our largest customer, with all revenues being royalty-based, thereby increasing our gross margins to 84% and maintaining our outstanding 49% net margin in line with the net margin we achieved in 2010 and 2011. Second, we transitioned to NP-4, which surpassed the NP-3 run rate in its first full production year, and became our largest revenue generator. Finally, we laid the foundation for the NPS line of network processors for smart networks that will target both next-generation edge routers and data centers, and we believe could double our total available market.

Key Stats (on next page)…

Revenue increased 63.62% from $9.29 million in the previous quarter. EPS increased 160% from $0.10 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.23 and has not changed. For the current year, the average estimate has moved down from a profit of $0.87 to a profit of $0.86 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)