Panasonic deal boosts Tower's revenue and growth

The chipmaker beat analysts earning per share predictions for the third quarter.

The Panasonic deal is making its mark: Israeli chip manufacturer Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) today reported a 70% increase in revenue in the third quarter, reaching a total of $226 million.

On a GAAP basis, Tower recorded a net loss in the third quarter of 2014 of $19 million ($0.37 per share), down from $32 million ($0.68 per share) in the third quarter of 2013. Non-GAAP 2014 third quarter net profit was $31 million, up 153% from the corresponding quarter of 2013, representing earnings of $0.58 per share.

The company beat analysts earning per share predictions of $0.44 per share. The companys revenue was in line with forecasts.

On a non-GAAP basis, 2014 third quarter gross profit increased 72% to $68 million, reflecting a 30% gross margin. Towers operating margin increased by 77% to $37 million. At the end of the third quarter the company had $195 million in cash.

The company expects fourth quarter sales of $235 million, with an upward or downward range of 5%. This forecast is lower than the analysts who expected $243 million. According to the company, Mid-range guidance represents 75% year over year growth. This forecast demonstrates full replacement of previous Nishiwaki revenues through non-Panasonic organic growth at higher margins.

Tower CEO Russell Ellwanger said, Thanks to strong margins from a loyal base of customers within growing markets, we executed the third quarter on multiple fronts to fully supplant the $40 million second quarter Nishiwaki revenue contribution in our cost covered factories. These activities drove a 3 point margin improvement and enabled a fourth quarter guidance of record revenue, representing organic growth of 33% with substantially higher margins.

We continue to see strong market demand as demonstrated by the 30% year-over-year increase in mask sets entering our factories, with contribution from all of our business units. We are well poised to serve the increased customer demand through our core TowerJazz facilities and advanced technology offerings, as well as through the added operational and technical capabilities of TPSCo.

Published by Globes [online], Israel business news - - on November 13, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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