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Sigma Designs (SIGM)
Q4 2013 Earnings Call
March 13, 2013 5:00 pm ET
Kenneth Lowe - Vice President of Strategic Marketing
Elias N. Nader - Interim Chief Financial Officer and Corporate Controller
Thinh Q. Tran - Founder, Chief Executive Officer, President and Director
Mustafa Ozgen - Vice President and General Manager
Gabi Hilevitz - Chief Executive Officer and Executive Director
Hamed Khorsand - BWS Financial Inc.
Stephen Chin - UBS Investment Bank, Research Division
Previous Statements by SIGM
» Sigma Designs Management Discusses Q3 2013 Results - Earnings Call Transcript
» Sigma Designs Management Discusses Q2 2013 Results - Earnings Call Transcript
» Sigma Designs Management Discusses Q1 2013 Results - Earnings Call Transcript
Thank you, Regina. Welcome to Sigma's conference call to discuss the financial results for our fourth fiscal quarter 2013. With me today are Thinh Tran, our CEO; Elias Nader, our interim CFO; Mustafa Ozgen, our Vice President and General Manager of Home Multimedida Products; and Gabi Hilevitz, our Vice President and General Manager of Home Connectivity Products. The press release containing the quarter results, including selected income statements or balance sheet information, was released after the market closed today. If you did not receive the results, the release is available on the Investors section of our website.
Today's agenda will begin with my brief introduction, a review of selected financials by Elias; an executive overview by Thinh; a business update by Mustafa; and Gabi on the respective business units; and finally, our forward guidance by Thinh. We'll then open the call to questions from analysts, and we expect to conclude the call within 1 hour.
Before we begin, I'd like to remind everybody that today's call contains forward-looking information including guidance we provide about our future revenue, gross margin and other financial measures and anticipated trends in the target markets. We caution you that the forward-looking information we present today is based on the current beliefs, assumptions and expectations that speak only as of today's date and involve risks and uncertainties that could cause actual results to differ materially from our current expectations.
Other risk factors that may affect our business and future results are detailed from time to time in Sigma's SEC reports, including Sigma's quarterly report on Form 10-Q as filed by the SEC December 6, 2012.
A partial list of these important risk factors are set forth at the end of today's earnings press release. Sigma undertakes no obligations to revise or update publicly any information, forward-looking statement information except as required by law. In addition, during today's call, we will be reporting certain financial information on a non-GAAP basis such as non-GAAP net income, which excludes certain costs and expenses. These excluded items are described in more detail in today's earnings press release, along with a detailed reconciliation of our GAAP to non-GAAP results.
And with that, I'll turn the call over to Elias.
Elias N. Nader
Thank you, Ken. Good afternoon, everyone. For the fourth quarter of fiscal 2013, revenue was $44.2 million, a decrease of $19.7 million or 31% compared to $63.9 million in the previous quarter. Compared to the year ago quarter, our revenue increased $8.6 million or 24% from $35.6 million. Our revenue breakouts for the quarter are as follows: By target market and percentage of total revenues for the quarter, home multimedia was $21.9 million or 50%; home connectivity, $19.9 million or 45%; licensing and other, $2.4 million or 5%. During the fourth quarter, we had 1 customer that exceeded 10% of our net revenue, and that is Flextronics, representing $6.5 million or 15%.
Gross margins. GAAP gross margins were 30% for the fourth quarter compared to 39.9% in the preceding quarter and 46.6% in the same period last year. Non-GAAP gross margins were 44% for the fourth quarter compared to 44.4% in the preceding quarter and 51.4% in the same period last year. During the fourth quarter, we had a write-down of inventory that negatively impacted our margin. Without this $3.4 million write-down of inventory, non-GAAP gross margin would have been 52%, which represents a 3% increase above our guidance. The primary factor in our improved non-GAAP gross margin in Q4 was product mix, which in Q3 was heavily weighted with greater shipments of DTV products to one of our larger customers, which have lower margins. The DTV product line continues to be based on customers and products acquired from Trident that have not had the benefit of various cost reduction efforts we continue to make as part of our further integration of the DTV product line.
Operating expenses and cost reduction program. Sigma remains focused on returning to profitability in Q1 FY '14, as well as achieving profitable revenue growth throughout the coming fiscal year. By the end of Q4 FY '13, the company had taken the actions required to achieve the $45 million cost reduction plan for FY 2014. As a result of these cost reductions and our expected revenue and gross margin, we believe the company will experience profitability starting in the first quarter.
We also expect our pro forma operating expenses in Q1 to be between $25.6 million to $26.1 million, which includes $2.7 million of depreciation and amortization. Additionally, we have taken significant steps to further reduce our cost of production during fiscal 2014. GAAP and non-GAAP net loss for the fourth quarter of fiscal 2000 -- the GAAP net loss for the fourth quarter of fiscal 2013 was $35.5 million or $1.05 per diluted share. This compares to a GAAP net loss of $39.5 million or $1.18 per diluted share in the previous quarter and a GAAP net loss of $18.8 million or $0.58 per diluted share in the year ago quarter.