LSCC

Lattice Semiconductor Corporation (LSCC)

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Lattice Semiconductor Corporation (LSCC)

Q1 2011 Earnings Conference Call

April 21, 2011 17:00 ET

Executives

David Pasquale – Global IR Partners

Darin Billerbeck – President and Chief Executive Officer

Joe Bedewi – Chief Financial Officer

Analysts

Richard Shannon – Northland Capital

Sanjay Devgan – Morgan Stanley

Ruben Roy – Pacific Crest Securities

Nick Clare – Robert Baird

Sujeeva De Silva – ThinkEquity

David Duley – Steelhead

Presentation

Operator

Good afternoon. My name is Leonard and I will be your conference operator today. At this time, I would like to welcome everyone to the Lattice Semiconductor first quarter 2011 conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to David Pasquale with Global IR Partners. You may begin.

David Pasquale – Global IR Partners

Thank you, operator. Welcome everyone to Lattice Semiconductor’s first quarter 2011 results conference call. Joining us from the company today are Mr. Darin Billerbeck, the company’s President and CEO, Mr. Joe Bedewi Lattice’s CFO. 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 or you can get a copy of the release off of the Investor Relations section of Lattice’s website.

Before we begin the formal remarks, I will review the Safe Harbor statements. It is our intention that this call will comply with the requirements of SEC Regulation FD. This call includes and constitutes the company’s official guidance for the second quarter of fiscal 2011. If at anytime after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum such as a press release or publicly announced conference call. The matters that we discuss today other than historical information includes forward-looking statements relating to our future financial performance and other performance expectations.

Investors are cautioned that 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 forward-looking statements. Some of those risks and uncertainties are detailed in our fillings with the Securities and Exchange Commission including our fiscal 2011 10-K and our quarterly reports on Form 10-Q. 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. Our prepared remarks also will be presented within the requirements of SEC Regulation G regarding Generally Accepted Accounting Principles or GAAP.

I would like to now turn the call over to Mr. Darin Billerbeck. Please go ahead, sir.

Darin Billerbeck – President and Chief Executive Officer

Thank you, David, and thanks to everyone for joining us on the call today. The first quarter was a strong one for us across the board. Results came in at the high end of our prior guidance as we benefited from our competitive product lineup and market growth. Our revenue came in well above the high end of our prior guidance. We did not see all of the upside is fallen driven.

Based on our customer feedback, we believe that only one $2 million of the upside came in from unexpected Japan related safety stock buying. The rest of the upside reflects the continued strength in our business, along with a higher than anticipated demand from our mainstream products.

In terms of specific results for the quarter, revenue of $82.6 million was up 13% from the $73.1 million in Q4 of 2010 and up 17% from the $70.4 million in Q1 of 2010. Gross margins came in at 60% compared to the 62.7% in Q4 of 2010 and the 58.5% in Q1 of 2010. Positive demand trends in the consumer, industrial and other end-markets were bolstered by a pickup in the communications market.

Additionally, we are pleased with the design win momentum for our recently launched MachXO2. PLD designers have praised MachXO2 for its unprecedented mix of low power, low cost and high system integration.

Let me now give you some additional color on the quarter. The revenue mix of new, mainstream and mature was 44%, 32% and 24% of revenue respectively in Q1. This compares to new at 43%, mainstream at 30% and mature at 27% in Q4 of 2010. New products were up 16% quarter-on-quarter outpacing the company’s over all growth of 13%.

A particular note in the new category was our LatticeECP3 family, which grew 32% quarter-on-quarter and our programmable mixed signal families, which grew 28% quarter-on-quarter. The mixed signal family now account for 6% of our total revenue.

Mainstream products were up 20% quarter-on-quarter with growth in all the one product family. Revenue from FPGA products represented 38% of the total revenue in Q1 compared to 33% in Q4. PLD products represented 62% of the total revenue in Q1 compared to 67% in Q4. On a geographic basis, revenue from Asia including Japan decreased to 61% of the total revenue compared to last quarter’s 66%. This decline was primarily due to Japan.

Revenue from North America increased quarter-on-quarter to 18% of revenue compared to 15% in Q4. Europe also increased coming in at 21% of revenue compared to 19% of revenue in Q4. On an end market basis all markets increased on an absolute dollar basis. Communications was 44% of revenue in Q1 compared to 46% in Q4. Computing was unchanged at 13% of revenue in Q1 compared to 13% in Q4. Industrial and other came in at 31% of revenue in Q1 compared to 29% in Q4. The increase reflects the sequential increase in sales of our mainstream products.

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