PMC-Sierra: Fiscal 3Q15 Financial Results

(in $ million)	3Q14	3Q15	9 mo. 14	9 mo. 15
Revenues	135.5	133.6	388.8	391.4
*Growth*		-1%		1%
Net income (loss)	5.5	6.7	(2.2)	2.8

PMC-Sierra, Inc. reported results for the third quarter ended September 26, 2015.

Net revenues in the third quarter of 2015 totaled $133.6 million, an increase of 7.1% compared to $124.8 million in the second quarter of 2015, and a decrease of 1.4% from $135.5 million in the third quarter of 2014.

GAAP net income in the third quarter of 2015 totaled $6.7 million or $0.03 per diluted share, compared to GAAP net loss in the second quarter of 2015 of $8.6 million or $0.04 per share, and to GAAP net income in the third quarter of 2014 of $5.5 million or $0.03 per diluted share. GAAP operating margin in the third quarter of 2015 was 8.3%, compared to GAAP operating margin in the third quarter of 2014 of 5.5%.

Non-GAAP net income in the third quarter of 2015 totaled $26.2 million or $0.13 per diluted share, compared to non-GAAP net income in the second quarter of 2015 of $18.0 million or $0.09 per diluted share, and to non-GAAP net income in the third quarter of 2014 of $22.5 million or $0.11 per diluted share. Non-GAAP operating margin in the third quarter of 2015 was 20.5%, compared to non-GAAP operating margin in the second quarter of 2015 of 15.3%, and to non-GAAP operating margin in the third quarter of 2014 of 17.3%.

In the third quarter of 2015, storage product revenues reached a quarterly record of $97.6 million, or 73% of revenues, an increase of 12% compared to storage product revenues of $87.0 million in the second quarter of 2015. Optical product revenues in the third quarter of 2015 totaled $23.5 million, or 18% of revenues, a decrease of 7% compared to optical product revenues of $25.2 million in the second quarter of 2015. Mobile product revenues in the third quarter of 2015 totaled $12.5 million, or 9% of revenues, which was flat compared to mobile product revenues of $12.6 million in the second quarter of 2015.

Recent highlights

On Oct. 5, Skyworks Solutions, Inc. and PMC announced a definitive agreement under which Skyworks will acquire PMC for $10.50 per share in an all-cash transaction valued at approximately $2 billion.
On Oct. 20, PMC announced it received an unsolicited proposal from Microsemi Corporation (NASDAQ: MSCC) to acquire all of the outstanding shares of PMC common stock in a cash and stock transaction. Under the terms of Microsemi’s proposal, PMC stockholders would receive $8.75 in cash and 0.0736 of a share of Microsemi common stock for each share of PMC common stock held at the close of the transaction. Based on the closing stock price of the Microsemi common stock on October 19, 2015, the Microsemi proposal was valued at $11.35 per share of PMC common stock.
On Oct. 22, PMC announced the META-240G, a multi-rate framer for routers that supports Ethernet and OTN protocols. Extending OTN to the router enables a single management layer between optical transport and routing networks, resulting in lower operating costs and improved service availability for network operators. META-240G provides ultra-low latency OTN encryption for secure cloud connectivity, and it consumes 50% less power per port than the previous generation, enabling router line card capacities of 1Tb/s and higher.
On Aug. 18, PMC announced that its Switchtec PSX PCIe Storage Switches would be an industry partner solution in the Intel Rack Scale Architecture demonstration at the Intel Developer Forum, Your Datacenter and Software Defined Infrastructure zone, August 18-20, 2015. The flexibility of PMC’s Switchtec PCIe switching architecture enables spec-compliant dynamic partitioning that is non-disruptive to I/O through an integrated, firmware-defined control plane. This creates a scalable performance storage tier capable of dynamically mapping any drive from a pool of NVMe SSDs to any one of multiple servers connected via Switchtec technology.
On Aug. 12, Derek Dicker, VP of PMC’s performance solutions group, presented a keynote, Breaking Down the Barriers to PCIe Adoption, at Flash Memory Summit 2015. PMC storage experts also discussed the latest trends in PCIe, NVMe and error correction that are shaping next-generation SSDs in forum sessions during the conference.
On Aug. 11, PMC and Mellanox Technologies, Ltd. announced the companies would showcase two breakthrough NVMe solutions at Flash Memory Summit, August 12-13, 2015. The companies announced a solution for peer-to-peer transactions between RDMA-capable NICs and NVRAM drives to accelerate critical data center applications by enabling direct memory transactions to persistent memory across a low-latency fabric. PMC and Mellanox also demonstrated NVMe over RDMA leveraging PMC’s Flashtec NVRAM Drive’s NVMe interface and Mellanox’s ConnectX-3 Pro network card.
On Aug. 8, PMC announced the industry’s first PCIe storage switches and the world’s fastest SSD controllers. SSDs designed with PMC’s second-generation Flashtec NVMe Controllers can deliver one million IO/s and greater than 20TB of flash capacity. Systems connecting a pool of these high-performance, low-latency drives require a new class of PCIe switching solutions with robust storage features. PMC Switchtec PSX PCIe Storage Switches enable PCIe-SSD-based systems to scale, with the resiliency, programmability and advanced diagnostics needed for mass deployment. Together, Switchtec PCIe storage switches and Flashtec PCIe controllers provide an end-to-end solution to reliably scale the next-generation performance tier of storage.