Atheros Stock Rises On Strong Earnings, Outlook

| About: Atheros Communications, (ATHR)

Shares of Wi-Fi chip maker Atheros (NASDAQ:ATHR) are rising after hours after it said third quarter sales just slightly beat analysts’ estimates, rising 74% from the year-earlier period and 9% from the second quarter to $79.6 million, ahead of the consensus estimate of $79 million. Profit, excluding some charges, rose to 19 cents a share, about a penny higher than estimates.

The outlook sounded good, too: the company expects sales in the fourth quarter to rise by as much as 9%, the company’s executives said on a conference call with analysts after the results were announced. That would put sales at about $86.76 million, ahead of the mean estimate of $84.5 million and near the top range of estimates. Profit per share will be in a range of 19 cents to 20 cents, the company said, which puts Atheros right around the mean estimate of 19.5, according to First Call.

Separately, Atheros said it will acquire a company called Attansic, which makes chips for gigabit ethernet, the fastest kind of corporate computer network wiring. Atheros expects 100% of all Wi-Fi routers will have to have gigabit ethernet connections to the Internet by 2008, the company said in a statement, hence the need to add these chips to its toolbox. Terms of the deal were not disclosed. Atheros expects the deal may be slightly accretive to earnings next year.

The company said shipments of Wi-Fi chips should rise at a double-digit percentage rate in the fourth quarter, especially chips for the fastest kind of Wi-Fi, dubbed 802.11n. A big part of that will be shipments inside of laptop computers, the company said.

Atheros shares rose as high as $20.65 in the after market, or 3% above their earlier close of $19.99.

Related: Atheros Communications Q3 2006 Earnings Call Transcript