Despite taking a fourth-quarter tax hit, Austin’s Silicon Labs ended last year with strong sales that executives say puts the company on the path to becoming a “$1 billion company.”
After a long stretch of record profits, the chipmaker on Wednesday reported a loss for its fourth quarter -- but said a one-time tax payment was to blame, rather than any downturn in the company’s performance.
Silicon Labs chief financial officer John Hollister said the company’s fourth quarter was affected by a $55 million tax hit due to recent changes in federal tax laws. While the tax law lowers the overall U.S. corporate tax rate, Hollister said the measure also imposed additional taxes on companies that have significant holdings outside the United States. Silicon Labs has offices or design centers in 16 locations across the globe.
The company will be allowed to pay the bill over the course of eight years, Hollister said, but it recorded the entire amount in its fourth quarter figures, meaning future quarters won’t reflect the hit.
“This is a very widespread thing that all corporations are going through,” Hollister told the American-Statesman on Wednesday. “When the tax law passed (in December), there was additional guidance that came out, and it was a process for us to understand what that means for our company.”
The company’s tax bill created a fourth-quarter loss of $4.9 million, or 11 cents per share, after recording a profit of $20.1 million for the same quarter a year ago.
Other than the tax issue, Silicon Labs reported another record-setting quarter.
Adjusting for one-time costs such as the tax hit, Silicon Labs earned 93 cents per share, beating analysts’ expectations. The company’s profit for the full year reached $47.1 million, or $1.09 per share.
Silicon Labs also posted a record revenue of more than $200 million during the fourth quarter. The chipmaker has now reported record revenue in nine out of its last 10 quarters.
Hollister said Silicon Labs’ Internet of Things division accounted for more than half of the company’s revenue last year, a first for the company. The Internet of Things -- or IoT -- is a chip industry term for non-computing devices that are connected to the Internet. The division had 28 percent year-over-year growth to $109 million in revenue. Its Infrastructure division also expanded by 5 percent, the company said.
“We have assembled very robust offerings that are specifically engineered and required for the Internet of Things market," Hollister said. “We are going to continue to expand in those areas.”
Silicon Labs plans to add staff in sales, hardware design and other departments this year.
“Over 50 percent of the new hires should be in Austin,” Hollister said.
The company is projecting profit for its first quarter to bounce back to a range of 73 cents to 79 cents per share, and projected first-quarter revenue of $196 million to $202 million.
“With the combined effort of our 1,300 employees, the support of our business partners and customers worldwide, we have transformed our business to address large, high-quality, sustainable and growing market trends in IoT, sustained energy, and infrastructure,” CEO Tyson Tuttle said during a call with investors and analysts on Wednesday. “Becoming a $1 billion company is in our sight.”
Silicon Labs was founded in 1996 and employs about 1,300 people, 650 of them in Austin. It makes chips that are used in a span of devices such as televisions and data centers, and its clients include Cisco, LG Electronics and Samsung.
The company for some time has been pivoting away from its broadcast and Internet access devices as it invests more in IoT, electric vehicles, renewable energy and other tech that is growing in demand. During the past several years, Silicon Labs has acquired several IoT businesses. It’s now in the process of purchasing Sigma Design’s Z-Wave wireless communications technology for $240 million.
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