InfiniBand developer Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) reported $37.8 million revenue for the third quarter of 2010, after Wall Street closed yesterday. The company beat its guidance and analysts' estimates of $37-37.5 million revenue. The result was 5% less than for the preceding quarter, but 15.6% more than the $ 32.7 million for the corresponding quarter of 2009.
Although Mellanox often beats the analysts' estimates, this was not a given for the third quarter. The company sprang a surprise in the second quarter, with guidance that was considerably below expectations, due to a large customer's change in its procurement strategy to buy processors instead of more expensive telecommunications cards. The surprise resulted in a 30% drop in Mellanox's share price within hours, although the company has since bounded back.
GAAP-based net profit fell to $3.5 million ($0.10 per share) for the third quarter from $4.8 million for the corresponding quarter, and $5.3 million for the preceding quarter. Non-GAAP net profit fell to $8.1 million ($0.22 per share) for the third quarter from $8.9 million for the corresponding quarter and $10.4 million for the preceding quarter. The company beat the analysts' consensus of $0.18 earnings per share.
Mellanox provided some drama in its guidance for the fourth quarter and full year.The company predicts $39.5-40 million revenue for the fourth quarter, in line with the analysts' consensus of $40 million. Its full year guidance is the same as the analysts' consensus of $153.5 million revenue.
However, Mellanox's gross profit margin guidance for the fourth quarter disappointed investors. It predicts a gross profit margin of 70-71% of sales, well below the percentage the company usually gives. Mellanox chairman, president and CEO Eyal Waldman said that fairly high sales of telecommunications equipment, especially switches and cables have a lower profit margin despite higher proces.
Mellanox closed at $20.89 on Nasdaq yesterday, giving a market cap of $704 million, but fell 3.8% in after-hours trading following the publication of its financial report. The share fell 4.2% by midday on the TASE today to NIS 71.16.
Published by Globes [online], Israel business news - www.globes-online.com - on October 21, 2010
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