Anadigics beats the Street

October 23, 2000: 1:31 p.m. ET

Chip maker reports 44 percent rise in sales, but wireless business declines

NEW YORK (CNNfn) - Communications chip maker Anadigics Inc. Monday reported a third-quarter profit that beat Wall Street's expectations by 2 cents on sales that rose 44 percent.

During the period ended Sept. 30, Anadigics said it earned $7.1 million, or 23 cents per share, compared with $2.5 million, or 10 cents per share in the year-ago quarter.

Analysts polled by earnings tracker First Call had expected the Warren, N.J.-based firm to turn a profit of 21 cents per share during the most recent quarter.

Sales came in at $51.1 million, up 44 percent from $35.5 million during the same period last year.

Shares of Anadigics (ANAD: Research, Estimates), which reported its latest results before the markets opened, were up $2.62, or 12.7 percent, at $23.31 in early afternoon Nasdaq trade.

Executives at Anadigics credited strong demand for the company's chips that are used in cable and fiber-optic communications for the sharp increase in revenue. However, they noted that there was some weakness in demand for their chips used in wireless handsets.

"Our broadband cable-access and fiber-optics businesses enjoyed a tremendous quarter," Bami Bastani, Anadigics' president and chief executive, said in a prepared statement.

Broadband revenue reached $30.4 million during the quarter, a 38 percent increase from the second quarter, the company said.

Meanwhile, wireless products revenue, derived principally from chips used to boost the power in wireless handsets, was $20.7 million in the quarter. That's down 18 percent from the second quarter.

"The wireless side of the business remains a little dicey, but the broadband cable and fiber-optic business is growing nicely," said James Moeller, an analyst with Dain Rauscher Wessels.

Anadigics blamed the wireless sales slump on inventory corrections and component shortage issues at its largest customer, Sweden's LM Ericsson (ERICY: Research, Estimates).

When Ericsson reported its latest quarterly results last week, the company cut its profit forecast for the fourth quarter to reflect a deepening loss in its wireless handset unit.