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Q4 2011 Earnings Call
February 06, 2012 4:30 pm ET
Jennifer Gianola -
Gregory S. Lang - Chief Executive Officer, President and Director
Michael W. Zellner - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance
Suzanne Craig -
James Schneider - Goldman Sachs Group Inc., Research Division
Sundeep Bajikar - Jefferies & Company, Inc., Research Division
Harlan Sur - JP Morgan Chase & Co, Research Division
Srini Pajjuri - CLSA Asia-Pacific Markets, Research Division
Ruben Roy - Mizuho Securities USA Inc., Research Division
Sandeep Shyamsukha - Auriga USA LLC, Research Division
William S. Harrison - Wunderlich Securities Inc., Research Division
Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division
Cody G. Acree - Williams Financial Group, Inc., Research Division
Previous Statements by PMCS
» PMC-Sierra's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» PMC-Sierra's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» PMC-Sierra's CEO Discusses Q1 2011 Results - Earnings Call Transcript
Thank you, John. Good afternoon, everyone and thank you for joining the call. With me today are Greg Lang, President and CEO; and Mike Zellner, Vice President and CFO. Greg will begin the call with the discussion of the business and key highlights from the fourth quarter and full year 2011, and Mike will then discuss the financial results for the fourth quarter 2011 and the business outlook for the first quarter of 2012. Please note that our fourth quarter and full year 2011 earnings press release was disseminated today via BusinessWire after market close, and a copy of the release can be downloaded from our website.
Before we begin, I would like to point out that during the course of this conference call, we will be making forward-looking statements that involve a number of risks and uncertainties. These risks and uncertainties include but are not limited to PMC's limited revenue visibility due to variable customer demand, market segment growth or decline, orders with short delivery times, customer concentration, changes in inventory, affect of natural disasters on supply, foreign exchange rates and volatility in global financial markets and other risk factors that are detailed in the company's SEC 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.
Note that PMC undertakes no obligation to update any forward-looking statements. Please note that for each of the historical non-GAAP financial measures mentioned on this call, a full reconciliation to the most comparable GAAP financial measures is included in our press release issued today.
In addition, a GAAP to non-GAAP reconciliation of financial measures that we will provide in our outlook will be posted on our website under the Financial Reports section of the Investor Relations tab. [Operator Instructions].
Thank you, and I will now turn the call over to Greg.
Gregory S. Lang
Thanks, Jennifer, and welcome to our call. Before I discuss our outlooks in near term -- our results and near term outlook I'd like to spend a few moments to reflect on what we've accomplished in 2011 and over the past few years. PMC finished 2011 with $654 million of revenue, 3% growth over 2010, and 46% growth from the $449 million of revenue we generated in 2007, or roughly 2.5x the industry growth rate. And in that same time period, we increased our non-GAAP earnings per share by over 250%. We achieved this growth despite one of the most volatile periods in the industry, and simultaneously working down our legacy exposure from roughly 30% of total revenue to approximately 10% of total revenue today. We've refocused our technology strategy around 3 major market segments that are critical to enabling the storage and bandwidth required to support the explosion of data traffic from video and more capable mobile devices.
Our growth has come from our storage and mobile investments. In storage, we entered the market and captured the leading technology and share position in 6-gig system silicon as well as the largest server OEM. This allowed us to report our largest quarter ever in Q3 2011 and grow a business that now represents over 60% of our revenue. And in mobile backhaul, we've captured the #1 position in hybrid backhaul designs that will enable the transition to packet networking and wireless backhaul. Along the way, we also reasserted our leadership in the Metro network by delivering the highest integration and most advanced OTN switching silicon that the industry has seen to date. Looking ahead, we will maintain our focus on being the semiconductor innovator transforming the networks that connect, move and store digital content. With the rapid proliferation of mobile devices and fat video content, packet-based networks and bandwidth requirements will continue to expand at a rapid pace. This demand is driving enterprises and carriers to upgrade and improve their storage and network capacity and performance. And PMC is at the center of enabling the infrastructure required for these fundamental traffic growth drivers.
So with this as a backdrop, I'll now discuss the results for Q4. The fourth quarter 2011 was a challenging time for the semiconductor industry, however, PMC performed in line with expectations. We reported $0.13 non-GAAP EPS on net revenues of $152.6 million. Revenues were down in Q4 due to a 14-week Q3, as well as inventory consumption.
Now I'll turn to provide a bit more color on the recent Q4 results by the end market segment. At the top level, the Storage Network segment was 64% of total revenue, up from 61% in Q3. Optical revenue came in at 23% of the total, down from 24% and mobile came in at 13%, down from 18% last quarter. Our Storage business in Q4 was down just under 17% coming off our largest quarter ever in Q3. If we factor in the 7.5% for the 14-week quarter of Q3, we're roughly flat quarter-to-quarter. However, we clearly see signs of inventory consumption, and a potential impact from hard drive shortages happening at major accounts that will continue into Q1.