Xilinx, Inc. (NASDAQ: XLNX) reported earnings for the first quarter on Wednesday after the bell. The technology company devoted to programmable logic said sales fell by 5% on a sequential basis and by 23% on a year-over-year basis. Not a great start to an earnings report, huh? It gets worse. On an adjusted basis, Xilinx made 21 cents per share versus 31 cents per share in the first quarter of fiscal '09. According to TheStreet.com, that 21 cents was good for a beat by two pennies.
Today, however, the market doesn't seem to be feeling the performance. As of this writing, afternoon trading saw shares of Xilinx bid down by over 3.5% on very heavy volume.
I can understand the lackluster response to the report. Sometimes beating estimates isn't enough. There's really nothing to the Xilinx story, from either a fundamental or technical perspective, that makes me want to put money down on the stock.
The company did generate a good amount of cash in the quarter, though. At least on a sequential basis. Operational cash flow did decrease compared to the previous year's similar quarter, but it was more than enough to take care of the dividend obligation.
Not that you'd be buying Xilinx for the dividend. Although I see some positive elements to the guidance, especially in terms of expectations for operating expenses, I'm not at all excited about the short-term prospects. The recession is making things difficult for Xilinx, as it is for many businesses, and I would rather own stronger companies with better brand equities instead of this one. I don't want to fool around with anything I'm not comfortable with during this period of contraction.
Disclosure: I don't own any company mentioned; positions can change without notice.
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