UPDATE 2-Volterra Q2 profit beats Street, gives strong Q3 view

* Q2 adj EPS 10 cents beats estimates by 4 cents

* Q2 revenue tops estimates

* Sees Q3 adj EPS $0.11-$0.16

* Sees Q3 rev above Street expectations (Adds outlook from conference call)

By Shrutika Verma

BANGALORE, July 20 (Reuters) - Low voltage power supply chipmaker Volterra Semiconductor Corp (VLTR.O) posted a better-than-expected quarterly profit, helped by higher gross margins, and forecast a strong third quarter.

The company expects third-quarter earnings of 11 cents to 16 cents a share, excluding items, on revenue of $25 million to $28 million.

Analysts were expecting earnings of 10 cents a share, excluding items, on revenue of $23.5 million, according to Reuters Estimates.

"Visibility with our customers has significantly improved and we are optimistic that our business will grow through the balance of the year and into 2010," Chief Executive Jeff Staszak said on a conference call with analysts.

For the third quarter, the company also sees notebook revenue flat to slightly up sequentially as the inventory correction is essentially complete and as a more normalized demand has materialized in this macroeconomic environment, Staszak added.

In the second quarter, notebook revenue grew 103 percent sequentially, the company said.

The company reported second-quarter gross margins of 59.1 percent, excluding items, compared with 56.5 percent a year ago.

"One of the things that surprised most on the upside was the gross margins," Brigantine Advisors analyst Ramesh Misra said. "That's the highest they have been growing in quite some time."

Volterra's design wins on the server and notebooks side are likely to have been the key growth drivers, Misra said.

Second-quarter net income fell to $1.1 million, or 4 cents per share, from $5.3 million, or 21 cents per share, a year earlier. Excluding stock-based compensation expenses, it earned 10 cents a share, beating market estimates by 4 cents.

Revenue fell 21 percent to $22.8 million. Analysts expected $21.5 million.

Shares of the company, whose customers include IBM (IBM.N) and Hewlett-Packard Co (HPQ.N), closed at $15.71 Monday on Nasdaq.

For alerts, please double-click [ID:nWNAB9036] [ID:nWNAB9088] (Editing by Vinu Pilakkott and Deepak Kannan)