Chip manufacturer Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) has outperformed the analysts' forecasts in its first quarter financials, and the company's share responded with a 5.6% jump in today's trading on the Tel Aviv Stock Exchange (TASE). "The average growth among chip manufacturers in the first quarter was 22%," Tower Semiconductor CEO Russell Ellwanger said today. "Our growth was 71%, while organic growth, excluding the venture with Panasonic (which did not affect the results in the corresponding quarter of last year, S.H.V.), was 33%, meaning that our organic growth also beat the comparison group."
Tower Semiconductor's first quarter revenue totaled $226 million. According to GAAP accounting rules, Tower posted a $73.1 million net loss, compared with a $39.1 million net profit in the corresponding quarter in 2014. The main reason for the loss was $85 million in non-cash financing expenses, due to accelerated conversion of Tower convertible bonds. Ellwanger and CFO Oren Shirazi explain that without this accelerate conversion, these would have been recorded as financing expenses throughout 2015 and 2016, instead of all in the first quarter.
Ellwanger said, "First quarter performance demonstrated the highest year-over-year growth of all reported foundries. We have continued to break our company record in the amount of photo masks that have entered our factories with 37% year-over-year growth, 45% including TPSCo, providing even greater confidence in our future outlook - customer demand is strong. First quarter margin performance was good and on track to achieve the previously announced fourth quarter 2015 40% non-GAAP gross margin target, significantly up from the 27% post TPSCo establishment. Upon opportunity, debt holders chose to convert their securities to become shareholders, reflecting belief in the company fundamentals, vision and strategy."
Tower expects second quarter revenue of about $235 million, slightly higher than the analysts forecasts and the company's revenue in the corresponding quarter last year. The company also anticipates a GAAP net profit starting next quarter. According to Shirazi, "They always asked us about GAAP net profit, and we could never promise anything because of the convertible bond cloud. Now that we no longer have a $12 expense each quarter, we know that at the expected level of revenue, we'll make a profit in the next quarter."
Published by Globes [online], Israel business news - www.globes-online.com - on May 13, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015