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Xilinx forecasts current-quarter revenue largely above estimates

(Reuters) - Xilinx Inc forecast current-quarter revenue largely above Wall Street estimates on Wednesday, bolstered by rising sales of its chips to data centers, sending its shares up nearly 2% in extended trading.

FILE PHOTO: A Xilinx sign is seen during the China International Import Expo (CIIE), at the National Exhibition and Convention Center in Shanghai, China November 6, 2018. REUTERS/Aly Song

The company said it expects third-quarter revenue of $750 million to $800 million, compared with analysts’ average estimate of $772.3 million, according to IBES data from Refinitiv.

Earlier this month, the Wall Street Journal reported that rival Advanced Micro Devices Inc is in talks to buy Xilinx in a deal that could be valued at more than $30 billion.

San Jose, California-based Xilinx makes programmable chips used in data centers to speed up tasks like artificial intelligence work and in 5G telecommunications base stations.

Xilinx’s data center chip business grew 30% to about $107 million, but the company said that growth would have been lower if not for the impact of trade restrictions that sped up sales to a customer it did not name but that most analysts believe is Huawei Technologies Co Ltd [HWT.UL].

New regulations that took effect in September cut off nearly all American chip sales to Huawei.

“It was normal course of business kinds of orders, but because a deadline was looming, we needed to make sure we delivered that,” Xilinx Chief Executive Officer Victor Peng told Reuters, while declining to name the customer.

Xilinx also said it won a contract to supply networking cards to a major American cloud computing company. It did not name the customer but said the contract will be worth $100 million per year by 2024. “They’re getting more accustomed to us as a key supplier,” Peng told Reuters.

Net revenue of Xilinx fell to $767 million from $833 million in the second quarter, still topping estimates of $755.1 million on the back of strength in the data center unit.

Net income fell to $194 million, or 79 cents per share, in the quarter, from $227 million, or 89 cents per share, a year earlier.

Reporting by Munsif Vengattil and Stephen Nellis; Editing by Maju Samuel and Subhranshu Sahu

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