Earnings Preview: Xilinx

Bank of America Merrill Lynch published a report on Xilinx XLNX today where they expected 2Q results in-line with consensus expectations. The report also began by anticipating general strength in China-driven communications. Bank of America Merrill Lynch said in the report, "Investors remain focused on declining operating margin leverage (30.2% in FY12 vs. 33.6% in FY11) as Xilinx faces higher R&D costs on 28nm product ramps, multiple tapeouts and mask costs." The report continued by noting that investors focus on Xilinx's competition to differentiate their 40nm and 28nm technology from Altera's. Xilinx was given a price objective of $37 and a rating of Neutral by Bank of America Merrill Lynch. Xilinx closed at $34.31 yesterday.