* Q3 net profit flat at $32 mln vs $35.6 mln forecast
* Q3 revenue falls to $154.6 mln
* Sees Q4 revenue $147-$157 mln
By Tova Cohen
TEL AVIV, Nov 15 Israel-based TowerJazz
expects 2013 to be a year of growth even as the
chipmaker reported a flat third quarter that was below analysts'
expectations as part of its business was affected by a consumer
shift from PCs to tablets.
"We are very confident now," Chief Executive Russell
Ellwanger told Reuters. "We saw record design wins in the third
quarter, we see a strong long term and a very strong mid term."
Shares in the firm, which makes chips used in smartphones
like Apple's iPhone and Samsung's Galaxy
models as well as battery chargers and AC/DC adapters, were up
0.7 percent to 29.8 shekels in a declining Tel Aviv market.
"We see 2013 as a growth year for both revenue and profit,"
Ellwanger said on Thursday.
In Japan TowerJazz is in the final stages of signing a
contract with a top Japanese integrated device maker (IDM),
Ellwanger said, noting the "strong brand name" company has a
factory that is not running at high utilisation. Under the
agreement, the Japanese firm would close the plant and TowerJazz
would transfer the work and core group of engineers into its
Ellwanger believes this is a model that other Japanese IDMs
TowerJazz posted third quarter net profit excluding one-time
items of $32 million, unchanged from a year earlier as revenue
fell to $154.6 million from $176.1 million. Analysts expected
TowerJazz to post profit of $35.6 million on revenue of $157
million, according to Thomson Reuters I/B/E/S.
The company completed an efficiency plan in its Japanese
plant, acquired last year, that included a reduction of 300
workers out of 1,300, leading to $30 million in annual savings.
TowerJazz had forecast third quarter revenue would be
between $152-$162 million.
"We have a portion of our business that at this moment is
weak, in the area of discrete components," Ellwanger said,
referring to chips that are not integrated circuits.
As consumers opt to buy tablets instead of more expensive
and larger personal computers, the number of discrete components
sold has been reduced. But over time, the market for these
components will recover as consumers tend to replace tablets
"More tablets are sold on a regular basis and there's always
a next generation and the price point is low so demand is high,"
Ellwanger said. "We don't think the discrete business will
remain weak in the long term."
Ellwanger forecast the company will have revenue of $147
million to $157 million in the fourth quarter, which is not
usually the strongest quarter for the chipmaker as purchases by
its customers for Christmas occur in the third quarter.