Lattice Semiconductor outperforms Wall Street’s Q3 earnings projections

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Lattice Semiconductor outperforms Wall Street’s Q3 earnings forecast.
Image: Lattice Semiconductor

Lattice Semiconductor managed to outperform Wall Street’s expectations on revenue and earnings per share (EPS) in the third quarter. The firm beat market watcher forecasts due to increased interest in its offerings and some recent organizational changes.

The chipmaker believes its business will expand in the current period, but the coronavirus pandemic may hurt its growth.

Lattice’s Expectation Upending Q3 Results

In the September quarter, Lattice took in $103 million in revenue with EPS of $0.09. Industry watchers pegged the firm’s results at $100.98 million and $0.08 in EPS. Though down slightly year-over-year, the chipmaker sequentially improved its income and profit by 2.4 percent and 12.4 percent, respectively.

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CEO Jim Anderson noted his employer faced significant headwinds this year but recently saw renewed demand for its core products. The manufacturer’s communications and computing group bettered its intake by 3 percent from 2019, while its industrial and automotive income rose by 5 percent annually.

CFO Sherri Luther added the company improved its profitability by cutting its production costs and deploying a new pricing strategy.

Lattice’s latest regulatory filing indicates it makes most of its sales to clients based in Asia. Because China’s economy began to recover from the coronavirus pandemic in Q3, its commercial and consumer purchasing patterns have normalized. The chipmaker’s quarterly revenue likely saw a boost due to that development.

Nevertheless, the firm deserves praise for making the changes necessary to increase its profitability amid unprecedented market volatility.

Returning to Growth in Q4

Lattice anticipates its business might expand for the first time in 2020 this quarter. The firm’s guidance included a revenue range of $99 million to $107 million. If it hits the high point of its forecast, the company will report year-over-year growth of 6.75 percent.

On the one hand, rising COVID-19 cases in Mainland China could negatively impact the chipmaker’s Q4 income. If Beijing initiates another round of regional lockdowns, its recent economic rebound could reverse sharply. But on the other, the country could swiftly curtail the pandemic’s spread, which would minimize its disruptive effects.

In addition, Lattice predicts its operating costs for the current period will be between $36.5 million and $37.5 million. That projection represents a yearly expense reduction of 16.6 or 14.38 percent and a sequential overhead cut of 26.1 or 24 percent. Provided its expenditures go down, and its sales go up, the firm would see a healthy uptick in Q4 net income.

Though the coronavirus has rendered near-term visibility murky, Lattice has made the right moves to ensure its success.

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