Xilinx Earnings Call Nuggets: Last Quarter’s Push-outs and End Market Visibility

Xilinx Inc (NASDAQ:XLNX) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Last Quarter’s Push-outs

Sameer Kalucha – JPMorgan: Hi. This is Sameer Kalucha calling in for Chris Danely. I had a question on the communication side of things. Given you experienced some push-outs in the December quarter, how are you thinking about the March quarter? Do you think there’s a possibility of something similar happening or you’re confident that whatever happened is behind us?

Jon Olson – SVP and CFO: Let me take that one. The world is still pretty choppy out there for us. But we are certainly seeing signs of improvement. So for example, we’re starting to see the beginning of what people have called the fixed phase in China of the TD-SCDMA, so 3G additional base station deployment and we believe we’re starting to shift some units, certainly not at the full level at this point in time, but some units into that particular ramp. So, that gives us a positive view of the world. Also I think most of what — much of what we saw in this quarter was a combination of some sluggishness by large communications customers in terms of their end demand and also some inventory correction. I would anticipate the inventory correction aspect of that to be – have worked throughout this past quarter, the December quarter and therefore, we’ll be moving back more towards I’d say traditional end market sales in that area. So, those two things together make me feel relatively confident that comps should be moving up and we’re kind of behind – the worse of it is behind us, but anytime someone tries to call the bottom, they’re usually wrong. So, I’ll give myself a little bit of an out there.

Sameer Kalucha – JPMorgan: Then, just a little color on how you’re thinking on the 28-nanometer ramp this calendar year going forward?

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Moshe Gavrielov – President and CEO: Well, we set targets of $10 million and $20 million in past quarters and exceeded them. We set a target of $20 million this quarter and significantly exceeded that. The target is $30 million and we expect to significantly exceed that in the quarter we’re in. So, we’re seeing that come out of the shoe and accelerate term plan and it’s working well. So, I continue personally to be extremely optimistic and enthused about the rollout of the 28-nanometer.

Jon Olson – SVP and CFO: We came out with our mid-range product which was targeted at the wireless communications area, and we just pointed out in the call how strong that Kintex business was inside of the 28-nanometer revenue. So, we think we are on the path to achieving the kinds of growth in segment and share gains in the wireless segment with Kintex in particular. So, that’s been a strength for us, and we have elements of all of our portfolio and production at this point of time. So, things are moving quite well relative to the characterization and production within several of our portfolios. So, pretty happy with it at this point.

End Market Visibility

Ambrish Srivastava – BMO Capital Markets: Jon, we’re also wrong on this side on trying to predict when comm is going to come back if ever, but outside of comm, can you please talk about the visibility in the other end markets? Then my quick follow-up Moshe on the 28-nanometer, can you help us understand whatever guidepost you can provide us to give us confidence that in 28, the non-comm segments will be bigger i.e. in consumer and automotive that you have been talking about?

Moshe Gavrielov – President and CEO: So, from an outside comms perspective, I think we’ve gone through our inventory cycle and many correction if you will in the industry side of things and across the board, all the geographies were stronger and distribution backlog going into this next quarter and a lot of the industrial segment, I mean they don’t just serve the industrial but a lot of it is served there and I believe there is the backlog is demonstrating some strengths in the outside the non-aerospace and defense portion of our industrial. So, I think we believe that both aerospace and defense and industrial that category as our broad industrial name is one of our – I think it will be one of fastest growing percentagewise segments that we have throughout this year. So, I think there is – the inventory issues that have been worked through. We talked also about aerospace and defense growing in March which is actually very — not very typical for us. So, again, a kind of not the seasonal patterns of aerospace and defense, but we have continued strong business there. So, I think outside of comms, we have latencies for accelerated growth across the board and that’s really attributable to our 45-nanometer Spartan-class product, as well as 28-nanometer.

Ambrish Srivastava – BMO Capital Markets: With regards to 28 non-comms rollout, it really is an unparalleled generation of product in terms of its breadth and depth and such it serves lots of markets, not only communications as Jon pointed out, wireless communications is ideally serviced by the Kintex product line. If you look at the broad product portfolio it addresses all of the markets. If you look at Zynq where have a minimum of a year lead over our competition in terms of delivering samples to the products that really is a product that is targeted at automotive industrial control and of course it also has communications applications, but it has tremendous breadth there. If you look at the high end of the product offering where we don’t have any competition, there’s a broad acceptance that everyone who needs a high-end product, right and that includes ASIC prototyping, but it isn’t limited to ASIC prototyping and for example, we’re receiving a lot of military applications where they are utilizing the unparalleled capacity we provide to our customers there. So, no, this is not only a comm story 28-nanometer. It’s broadest, deepest portfolio and addresses all of the markets that we’re in including all of the ones that you mentioned and some of them take a little longer to enter revenue from some happen faster. But so far, the non-comms world is working well on 28 in terms of design wins and transition to revenue, continue to be very confident in that.

A Closer Look: Xilinx Earnings Cheat Sheet>>