Volterra shares fall on higher litigation costs

posted: 36 DAYS 6 HOURS AGO

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PHILADELPHIA -Shares of Volterra Semiconductor Corp. fell Tuesday after the chip maker reported third-quarter earnings that disappointed Wall Street in part due to litigation costs that drove operating expenses higher.

Analysts now are worried that continuing litigation expenses will put pressure on future earnings. Shares of Fremont, Calif.-based Volterra were down $2.31, or 12.6 percent, to $16.09 in morning trading.

Late Monday, Volterra reported earnings of 19 cents per share in the third quarter, excluding stock-option charges, a penny shy of analysts' expectations as polled by Thomson Reuters. Revenue fell 3 percent to $29.7 million.

Volterra said in a conference call with analysts that selling, general and administrative expenses rose by 24 percent in the quarter to $7.1 million from the previous quarter. Litigation expenses came to $1.7 million and will continue to be so in future quarters.

Volterra is suing Infineon Primarion for patent infringement. The case is expected to go to trial next year.

Wedbush Securities analyst Patrick Wang said that while Volterra's 2010 revenue growth trends remain on track, a "foggy litigation timeline with higher expenses will pressure earnings growth."

He raised his fourth-quarter revenue estimate to $32 million from $31.2 million, but cut his earnings outlook by 4 cents to 20 cents.

Caris & Co. analyst Nicholas Aberle also noted the drag on earnings from the lawsuit. But he kept his "Above Average" rating, noting that the company continues to gain market share in the server and storage market and sees growth in notebooks and communications.

2009-10-20 11:44:21