Xperi (XPER) Q3 Earnings Miss Estimates, Revenues Up Y/Y

Xperi Corporation (NASDAQ:XPER) reported third-quarter adjusted earnings of 30 cents per share, missing the Zacks Consensus Estimate by 6 cents.

Since the third-quarter earnings release on Nov 2, the share price is down 8.0%. Notably, on a year-to-date basis, the company’s shares have lost 53.2% compared with the 23.5% loss of the industry it belongs to.

The poor results were due to weakness in a few of its markets, namely imaging. The company witnessed increasing internal competition for its low-end products. Other problems which negatively impacted third-quarter results were customer-specific issues, competition in the mobile market and expected execution of certain new licenses.

However, Tessera has intensified its IP licensing efforts and is currently working with a number of semiconductor manufacturers and OSATs to enhance its portfolio of advanced packaging and interconnect technologies. Moreover, the company remains confident about a favorable resolution of the Broadcom (NASDAQ:AVGO) matter.

Revenues

Tessera’s revenues of $88.5 million increased 41.8% year over year. However, revenues were below the company’s guidance range of $90-$97 million.

Margins

Owing to high percentage of licensing revenues, Tessera usually generates strong gross margins. Accordingly, Tessera’s third-quarter gross margin was 98.1%, down 30 basis points from 98.4% reported in the year-ago quarter.

Tessera’s operating expenses (research, development and other related costs & selling, general and administrative) were $59.8 million, up 183.4% year over year. Also, as a percentage of sales, both the expenses increased on a year-over-year basis.

Net Income

Pro forma net earnings were $15.9 million or earnings of 30 cents per share compared with $28.6 million or 57 cents in the year-ago quarter.

On a GAAP basis, net loss was $12.1 million or a loss of 24 cents per share against net earnings of $23.8 million or of 48 cents in third-quarter 2016.

Balance Sheet and Cash Flow

At quarter end, cash, cash equivalents and short-term investments were $1.49 billion, up from $1.28 billion from the prior quarter.

Dividend/Share Repurchase

During the quarter, the company approved a regular quarterly dividend of $0.20 per share, payable on Dec 13, 2017, to stockholders of record on Nov 22, 2017.

During the third quarter, the company repurchased approximately 0.4 million shares for an aggregate amount of $10 million. As of Sep 30, 2017, it still had approximately $148.2 million remaining under its current repurchase program.

4Q Guidance

For the fourth quarter of 2017, Tessera expects GAAP revenues in the range of $83-$138 million. GAAP loss per share is expected between (30) cents and 33 cents and non-GAAP loss per share is projected in the range of 29-78 cents.

For 2017, the company expects revenues in the range of $330-$385 million, down from $370-$445 million.

Other Stocks to Consider

Currently, Xperi has a Zacks Rank #5 (Strong Sell). A few better-ranked stocks in the broader technology sector are NVIDIA Corporation (NASDAQ:NVDA) and SMART Global Holdings, Inc. (NASDAQ:SGH) , each sporting a Zacks Rank #1 (Strong Buy), while Applied Materials, Inc. (NASDAQ:AMAT) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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