Summary
NXP Semiconductors N.V. reported its second quarter 2011 financial results on July 28, 2011. The company demonstrated sequential product revenue growth for the ninth consecutive quarter, driven by strong demand in its High Performance Mixed Signal (HPMS) and Standard Products segments. Total revenue from continuing operations increased slightly year-over-year, with significant improvements in gross and operating margins compared to the prior year period, both on a GAAP and non-GAAP basis. A key strategic move highlighted is the successful closing of the Sound Solutions business divestiture on July 5, 2011, which provided $855 million in gross proceeds. This transaction allows NXP to sharpen its focus on its core semiconductor business and accelerate debt reduction. The company also saw its corporate credit rating upgraded by Standard & Poor's to 'B+' from 'B-', reflecting improved financial health and deleveraging efforts.
Key Highlights
- 1Q2 2011 revenue from continuing operations was $1,121 million, a 0.2% increase year-over-year and a 3.6% increase quarter-over-quarter.
- 2Product revenue (HPMS and Standard Products) increased by 10.7% year-over-year to $1,025 million.
- 3GAAP gross margin improved to 46.7% from 39.9% in Q2 2010, and GAAP operating margin rose to 11.9% from 6.8%.
- 4Non-GAAP gross margin was 47.8%, and non-GAAP operating margin was 20.4%, showing significant year-over-year improvements.
- 5The divestiture of the Sound Solutions business was completed on July 5, 2011, for $855 million, with proceeds to be used for debt reduction.
- 6Standard & Poor's upgraded NXP's corporate credit rating to 'B+' from 'B-' on July 7, 2011.
- 7NXP provided Q3 2011 guidance, anticipating product revenue between down 5% and up 1% sequentially, with non-GAAP operating profit expected between $210 million and $232 million.