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Lattice Semiconductor Corporation (LSCC)
Q3 2010 Earnings Conference Call
October 21, 2010 5 PM ET
David Pasquale – Global IR Partners
Christopher Fanning – Interim CEO, Corporate VP and General Manager, Low Density Solutions & Mixed Signal Solutions
Michael Potter – Corporate VP and CFO
Richard Shannon – Northland Capital
Nick Claire – Robert Baird
Sundeep Bajikar – Morgan Stanley
Apurva Patel – Ticonderoga Securities
Bill Dezellem – Titan Capital Management
David Duley – Steelhead Securities
Previous Statements by LSCC
» Lattice Semiconductor Corporation Q2 2010 Earnings Call Transcript
» Lattice Semiconductor Corporation 2Q 2010 Earnings Call Transcript
» Lattice Semiconductor Corporation Q1 2010 Earnings Call Transcript
Thank you, Operator. Welcome everyone to Lattice Semiconductor’s Q3 2010 results conference call and thank you for being patient on the entrance. There were technical difficulties on the conference call side.
Joining us today from the company are Mr. Christopher Fanning, the company’s Interim CEO Corporate Vice President and I Low Density and Mixed Signal Solutions and Mr. Michael D. Potter, Lattice’s Corporate Vice President and Chief Financial Officer. Both executives will be available for Q&A after the prepared comments.
If you have not yet received a copy of today’s results release, please email Global IR Partners using LSCC@GlobalIRPartners.com where you can get a copy of the release off of the investor relations section of Lattice Semiconductor’s website.
Before we begin the formal remarks I will review the safe harbor statement. It is our intention that this call will comply with the requirements of FCC Reg FD. This call includes and constitutes the company’s official guidance for the first quarter of fiscal 2010. If at any time after this call we communicate any material changes to this guide, we intend that such updates will be done using a public forum such as a press release or a publicly announced conference call. The matters that we discuss together with historical information includes forward-looking statements relating to our future financial performance and other performance expectations. Investor’s forward looking statements are neither promises nor guarantees. They involve risks and uncertainties that may cause actual results to differ materially from those projected in the forgoing statements. Some of those risks and uncertainties are detailed on our filling for the FCC including our fiscal year 2009 Form 10K filed in March 10 and forward looking reports on Form 10Q. The company disclaims any obligation to publicly update or revise any such forward-looking statements to reflect events or circumstances that occur after this call. For our prepared remarks will also be presented within the requirements of FCC Reg I regarding generally accepted accounting principles or GAAP. I would now like to turn the call over to Mr. Christopher Fanning. Please go ahead sir.
Thank you, David, and thank you everyone for joining our call today. The Q3 was within our guidance for all three metrics – revenue, gross margin and operating expense. An important achievement for us this quarter is that we grew our new products 10% quarter on quarter and our new products more than doubled on a year on year basis. New products are where we have placed significant focus more recently and we are pleased with the level of customer adoption in design win momentum for these solutions.
In terms of specific results for the quarter, revenue of $77.1 million was flat verses Q2 2010 and up 57% compared to the year ago quarter. Gross margin came in at 59.1% compared to 61.2% in Q2 2010 and 54.2% in Q3 2009. Operating expense was $30.7 million compared to $31.4 million in Q2 2010.
As noted in our release, revenue was impacted by lower sequential sales in our mature product category, an area that has more recently had several strong quarters of growth. Mature products typically decline over the long term and tend to be more affected by macroeconomic conditions and inventory modulations than the PLD industry generally. Growth in our new product segment is being led by two key product groups, midrange FPGAs and low density PLDs. The low cost, low power Lattice ECP3, our newest midrange FPGA grew more than 50% quarter on quarter. This is the seventh consecutive quarter of growth since the ECP3’s launch.
We continue to see a strong rate of customer adoption to this product family in our investing to further build out our solutions portfolio for ECP3. During Q3 we introduced a SPI-4.2 solution for the communications market and a video display IP Suite to enable customers to quickly implement proprietary image processing functions. Our low density MachXO also continues to experience very good customer adoption and grew 17% quarter on quarter. This is more than double the product revenue verses the year ago quarter. We have now shipped 50 million MachXO devices up from 25 million from just eleven months ago. And today the MachXO is our largest revenue product line.
Our programmable mixed signal products continue to account for over 5% of our revenue as we continue to grow our investment to address this important market opportunity. With the introduction of the platform manager products earlier this month, we have released the first products in our third generation of programmable power management solutions. These products provide value to our customers in that they reduce an engineer’s bill of material costs and board space requirements, increase their designs reliability and provide effective time efficient trouble shooting capability to mitigate time to market risk. Based on our results, we believe that we are continuing to gain momentum in our targeted market and we are optimistic about our business moving forward.