Semtech Corporation (NASDAQ: SMTC) stock lost over 4.6% in the pre-market session of August 27th, 2020 (Source: Google finance) after the company posted lower than expected results for the second quarter of FY 21. Bookings had fallen as compared to the prior quarter, but resulted in a book-to-bill above 1. The net revenues from the high-end consumer market fell 11% compared to the prior quarter and represented 22% of total net revenues. About 14% of high-end consumer net revenue was attributable to mobile platforms, and approximately 8% was attributable to other consumer systems. The company expects the Q3 gross margin to decline slightly due to a higher mix of consumer revenue. The company expects the Q3 GAAP operating expense to rise to the tune of 1% to 4%, sequentially, mainly due to higher share-based compensation expense driven by higher stock price. For Q3 of fiscal year 2021, the company project net revenues from the Signal Integrity products group to be down slightly as 5G wireless growth is offset by lower data center and PON demand following the very strong first half demand.
In the second quarter, shipments into Asia represented 80% of net sales, North America represented 12%, and Europe represented 8%. During the period, the total direct sales was approximately 19%, and sales to distribution was approximately 81% of net sales. The company’s 40% of the total POS comes from the infrastructure end market, 27% from the industrial end market and 26% from the high-end consumer end market. Tolls bookings accounted for about 21% of shipments during the quarter. The company posted 50 basis points expansion in the Q2 gross margin due to a higher mix of infrastructure revenue.
SMTC in the second quarter of FY 21 has reported the adjusted earnings per share of 43 cents while reported the adjusted revenue growth of 5 percent to $143.66 million in the second quarter of FY 21. The net revenue from the infrastructure market rose 18% sequentially and rose 37% over the prior year, and represented 47% of total revenues. The industrial market net revenues grew 12% sequentially, and represented 31% of total revenues. Additionally, the company repurchased approximately 233,000 shares or $12 million of stock in Q2. The company’s stock repurchase authorization now stands at approximately $68 million