PMCS

PMC - Sierra, Inc. (PMCS)

$8.965
*  
0.01
0.11%
Get PMCS Alerts
*Delayed - data as of Dec. 18, 2014 11:37 ET  -  Find a broker to begin trading PMCS now
Exchange: NASDAQ
Industry: Technology
Community Rating:
View:    PMCS Real Time
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

PMC-Sierra, Inc. (PMCS)

Q3 2009 Earnings Call Transcript

October 22, 2009 5:30 pm ET

Executives

David Climie - VP, Marketing Communications

Michael Zellner - CFO

Greg Lang - President and CEO

Analysts

Srini Pajjuri - CLSA

Dan Morris - Oppenheimer

David Wu – GC Research Ltd.

Ruben Roy - Pacific Crest Securities

Sandy Harrison - Signal Hill

Allan Mishan - Oppenheimer

Anthony Carbone – Orgia

James Schneider - Goldman Sachs

Eric Ghernati - Bank of America

Presentation

Operator

Good day and welcome to PMC-Sierra 2009 Q3 earnings release and conference call. Today's conference is being recorded. Today is Thursday, October 22, 2009.

It is now my pleasure to introduce Mr. David Climie. Please go ahead, Mr. Climie.

David Climie

Thank you. Good afternoon, everyone, and thank you for attending our investor conference call. With us on the call today is Greg Lang, President and CEO, and Mike Zellner, Vice President and CFO. Please note that our third quarter 2009 earnings release was disseminated today via business wire after market closed and a copy of the release can be downloaded from our website.

Before we begin, I’d like to point out that during the course of this conference call, we'll be making forward-looking statements that involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, product demands, inventory levels, pricing, exchange rates, taxation rates and other risk factors that are detailed in the company's Securities and Exchange Commission filings.

Actual results may differ materially from the company's projections. For further information about these risks and uncertainties, please read the company's SEC filings, including our forms 10-K and 10-Q.

If you’re asking a question during the Q&A session of today's call, we request that you limit yourself to one question and if you would like to ask a second question, please re-queue with the operator. Thank you, and I'll turn the call over to Mike Zellner.

Michael Zellner

Thanks, Dave. I'll review our third quarter 2009 results and financial position and then turn it over to Greg to discuss our business activity in detail.

PMC-Sierra’s third quarter demonstrated a solid quarter of performance. Revenue in Q3 was $130.9 million. This was slightly above the mid-point of our guidance for the quarter, and an increase of $7.7 million or 6% over Q2.

Our turns business, meaning those orders booked and shipped within the same quarter, was 21% of revenue in Q3, compared with 23% in Q2.

By region, Asia continued to generate the strongest results in the quarter. The following geographic breakdown of revenues is provided on a build to basis. The breakdown is as follows. China 36%, Japan 15%, other Asian geographies 34%, North America 12%, Europe and other 3%.

During Q3, we saw China sales return to more normal levels. This sequential reduction was attributed to the initial Q2 rush of orders relating to the 3G build out, as well as the second quarter strength of Fiber-to-the-Home in Asia. The decline was more than offset by the rest of the business recovering generally and was in line with end market demand.

In Q3, we had two customers that represented greater than 10% of revenues, calculated on a rolling 12-month basis, namely HP most significantly and the Enterprise storage side of our business and Walway, mostly associated with our WAN infrastructure business.

Gross margin in the third quarter was 66.2% compared to 68.2% in Q2 primarily due to changes in product mix as well as having two customer funded aseck mass sets at 0 margin in Q3.

On a non-GAAP basis, operating expenses decreased from $53.2 in Q2 to $59 in Q3, as we benefited from favorable exchange rate in certain geographies, lower photo mass and wafer cost incurred during the quarter, and maintained our operating expense discipline throughout the organization.

As mentioned last quarter, we consider this level of operating expenses to be somewhat low from normal levels.

In Q3, we are pleased to have achieved the non-GAAP operating income before other income and taxes of $35.7 million or 27% non-GAAP operating margin, which is the second consecutive quarter in our new targeted operating margin range of 25% to 30%.

The non-GAAP tax provision was $1.3 million in the third quarter compared to $1 million in Q2, primarily due to changes in product and income mix across different tax jurisdictions.

Non-GAAP net income for Q3 was $34.5 million or $0.15 per share on a diluted basis, representing a $4.89 million or 16% increase over Q2 non-GAAP net income of $29.7 million.

Q3 GAAP net income per share was $0.12 versus $0.03 in Q2. The comparable GAAP measures for each of gross margin, operating expenses, operating income, provision for income taxes and net income are reconciled to the non-GAAP amounts in our reconciliation of GAAP to non-GAAP measures included in our press release issued today.

The primary reconciling items for Q3 are as follows: $9.8 million in amortization of purchased intangible assets, $5.1 million in stock based compensation expense, $1 million in net foreign exchange loss on the company's foreign tax liabilities, and $9.9 million of net income tax effect of these and other items, most of which relate to a net deferred tax recovery from foreign exchange translation of a foreign subsidiary described in the press release.

Turning to the balance sheet, net of the $68.3 million face value of our convertible notes, we ended the quarter with over $351 million of cash, cash equivalents, short-term investments, and investment securities, an increase of $65 million from Q2.

Read the rest of this transcript for free on seekingalpha.com