Silicon Laboratories (Nasdaq: SLAB) is
bringing home the bacon, slab by fat slab.
The third quarter was a massive hit. Sales came in at $126
million, 20% above the previous quarter and 11% over the
year-ago period's record level. Earnings per share of $0.47
more than doubled the previous quarter's GAAP profits and
compared even better to the $0.02 per share seen a year ago.
And remember that we're comparing last year's pre-meltdown
numbers to the recession-tinged business of 2009.
That'sthe kind of
fat, juicy baconI'm talking about.
Many a stock would ride a report like that to a healthy
jump in share prices, but in this case, Mr. Market barely
shrugged. I suppose the good news had already been priced
into Silicon Labs' valuation. With a 66% 52-week climb, this
stock has outperformed every rival over the last year -- from
giants like
Texas Instruments (NYSE: TXN) and
Analog Devices (NYSE: ADI) to small caps such
as
Conexant Systems (Nasdaq: CNXT).
Management was so pleased with these results that they
started a $150 million share repurchase program, which is a
shareholder-friendly use of spare cash.
Five out of Silicon Labs' eight product lines managed to
post a record level of earnings, led by a 40% sales jump in
the radio-frequency department.
Korean electronics guru Samsung, which appears to be the
largest customer for such chips, is ramping up chip orders to
make a big push in this year's holiday shopping season.
Silicon Labs also added two faceless "marquee names" to
its FM radio customer list, including one media player
specialist and one handset maker. FM tuners are a rare
feature in cell phones today, found mostly in fancier
Nokia (NYSE: NOK) models, so any new
customers represent a large potential growth avenue. If such
tuners become a must-have feature, Silicon Labs seems nicely
positioned for future growth on that product line alone.
And if not, Silicon Labs is hedging its bets. A new range
of touchpad controllers, IR sensors, and light sensors was
announced alongside the earnings. CEO Necip Sayiner believes
that he's got the best human interface chips on the market:
"We have a significantly better solution in terms of power
efficiency," he said. "And I don't mean just two times or
three times better, I'm talking about orders of magnitude
better due to the approach that we have taken." Are
Cypress Semiconductor (NYSE: CY) and
Atmel (Nasdaq: ATML)
shaking in their bootsyet?
Sure, Sayiner could be projecting empty hopes and
braggadocio here. But Silicon Labs has the track record to
show that it can walk the talk. Stay tuned as this small-cap
Stock Advisorpick
grows up before our very eyes.
This article was originally published as
This Small Cap Is Bringing Home the Baconon
Fool.com
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