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PLX: Fiscal 1Q14 Financial Results

Revenue and net income decreasing slightly

(in $ million) 1Q13 1Q14
Revenue 26.2 24.8
Growth   -5%
Net income (loss)
2.6 2.2

PLX Technology, Inc.www.plxtech.com announced first quarter revenues of $24.8 million and GAAP net income of $2.2 million, or $0.05 per share (diluted).

Higher gross profits in the first quarter, combined with lower expenses, drove increased income over Q4 and contributed to our fifth straight profitable quarter,” said David Raun, PLX president and CEO. “In addition, we increased cash, saw strong bookings to support Q2 growth, and layered in another solid quarter of design wins.”

“The sequential decline in our first quarter revenue was primarily the result of two temporary factors. One of our larger customers moved to a vendor managed inventory (VMI) program where it worked down its owned inventories rather than drawing from our VMI. We expect this customer to return to normal levels in late Q2 or Q3. We were also supply constrained on some of PCIe Gen2 products in Q1 due to assembly issues at one of our subcontractors. These issues have been addressed and are not expected to be a limitation in the second quarter.

“These issues aside, the demand for our products remains solid. Based on current backlog, forecasts from customers, and resolution of the assembly issues, we expect all of our market segments to be up in Q2, driven primarily by Gen2 and Gen3 shipments. We are beginning to see an increasing number of Gen3 design wins go into volume production and we believe that this ramp will fuel our growth this year and in years to come,” said Raun.

Product Update:
During the first quarter, the company announced that Fujitsu selected PLX’s ExpressLane PEX8764 switch to deliver high-speed PCIe Gen3 interconnect within its Fujitsu Storage ETERNUS DX S3 disk arrays. The PEX8764’s 64 lanes and 16 ports empower the ETERNUS DX series with high-speed bi-directional PCIe interconnect throughput of 128GB/s.

Acer chose PLX’s PCIe-to-USB device controller technology for its innovative Acer Aspire Z3-600 all-in-one personal computer. PLX’s USB Duet technology provides Aspire Z3-600 users with the advantage of simple, plug-and-play device sharing using a standard USB cable between the Z3-600 and any other Windows-based computers. PLX PCIe-to-USB device controller technology bridges the high performance of both PCIe Gen2 and USB 3.0.

PLX also announced that three ExpressLane PCIe Gen3 switches have passed the testing procedures of the PCI-SIG Compliance Workshop and are now listed on the group’s PCIe 3.0 Integrators List. The comp    ny is the only PCIe switch vendor to date that has achieved Gen3 compliance.

ECN Magazine named PLX ExpressFabric technology a finalist in the ECN IMPACT Awards program, which recognizes excellence in electronics design engineering. ECN selected PLX’s PCIe-based ExpressFabric for the IMPACT program’s Market Disrupter category due to the technology’s ability to slash hardware costs and energy requirements.

At the Embedded World Conference held in Germany, PLX demonstrated external box-to-box connectivity using optical and copper cabling via the universal PCIe standard. The company also showcased its current generation of ExpressLane PCIe Gen3 switches, highlighting the devices’ performance and plug-and-play connectivity, along with the benefits of their integrated DMA engines.

Business Outlook:

  • Net revenues for the second quarter ending June 30, 2014, are expected to be between $27 million and $29 million.
  • Non-GAAP gross margins are expected to be approximately 56% with GAAP margins at approximately 55 percent. The non-GAAP number excludes an accrual for royalties associated with the Internet Machines litigation and share-based compensation.
  • Operating expenses are expected to be approximately $15.0 million. Included in operating expenses are share-based compensation charges of approximately $0.6 million. The second quarter also includes a 40nm tape-out. For the year, operating expenses net of share-based compensation are expected to be about $52 million.

Comments

Three Months Ended March 31
2013
December 31
2013
March 31
2014
PCIe Revenue 71% 72% 70%
Connectivity Revenue 29% 28% 30%

Abstracts the earnings call transcript:

David Raun, president and CEO:
"Q1 revenues were impacted primarily by two temporary factors. One of our larger customers moved to a vendor managed inventory process, where they worked down their own owned inventories rather than taking draws from our VMI. We expect this customer to return to normal levels in late Q2 or in Q3. We were also supply constrained on some of our PCI Express Gen 2 switch devices due to assembly issues at one of our subcontractors. These assembly issues have been addressed and are not expected to be in limitation this quarter.
"Turning to our markets, the storage space, our largest market segment was up slightly in Q1. We also saw encouraging signs as overall bookings for storage increased for Gen 3 switches to support the ramp of new customer programs including a top tier enterprise storage supplier that is in the process of introducing its new product line."

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