PMC-Sierra: Fiscal 4Q13 Financial Results

PMC-Sierra, Inc. (PMC) reported results for the fourth quarter and full year ended December 28, 2013.

Net revenues in the fourth quarter of 2013 totaled $126.1 million, a decrease of 2.2% compared to $128.9 million in the third quarter of 2013, and a decrease of 2.6% compared to $129.4 million in the fourth quarter of 2012.

GAAP net loss in the fourth quarter of 2013 totaled $16.7 million, or $0.08 per share, compared to a GAAP net loss in the third quarter of 2013 of $2.7 million, or $0.01 per share. The fourth quarter GAAP net loss included provision for income taxes of $12.8 million, driven primarily by net deferred tax expense associated with changes in assessment for certain income tax credits. Non-GAAP net income totaled $18.5 million, or $0.09 per diluted share, down seven% in the fourth quarter of 2013 compared to non-GAAP net income of $20.0 million, or $0.10 per diluted share in the third quarter of 2013.

“Fourth quarter results were above the midpoint of our expectations and reflected solid growth in our storage business,” said Greg Lang, president and CEO. “It is encouraging to see our storage and server businesses finish the year strong.“

Net income on non-GAAP basis in the fourth quarter of 2013 excludes following items:

• (i) $6.8 million stock-based compensation expense;
• (ii) $13.6 million amortization of purchased intangible assets;
• (iii) $4.1 million severance costs; and
• (iv) $10.7 million of other adjustments, including income tax related as described in the accompanying GAAP to non-GAAP reconciliation table.

For the full year ended December 28, 2013, net revenues were $508.0 million compared to $531.0 million for the year ended December 29, 2012, a decrease of 4.3% year over year.

GAAP operating loss for the full year 2013 was $6.7 million compared to GAAP operating loss of $282 million reported in the year ended December 29, 2012. GAAP operating loss for the full year 2012 included impairment write-downs of goodwill and intangible assets of $274.6 million. Non-GAAP operating income for the full year 2013 was $68.1 million compared to non-GAAP operating income of $77.5 million in the prior year. GAAP net loss for the full year 2013 was $32.5 million, or $0.16 per share, compared to GAAP net loss of $319.3 million, or $1.47 per share, for the prior year. Non-GAAP net income in the year ended December 28, 2013, was $68.2 million or $0.33 per diluted share, compared to non-GAAP net income of $81.8 million or $0.38 per diluted share, in the year ended December 29, 2012.

The company announced the following in the fourth quarter and 2013:

• On Nov. 18, TweakTown recognized the Adaptec by PMC Series 8 12Gb/s RAID controller with an Editor’s Choice Award, commenting that they “are built to address the changing landscape of the data center.”
• On Nov. 14, Fierce Telecom recognized PMC’s WinPath4 mobile backhaul processor with two Fierce Innovation Awards: a Best in Show award for Best Technological Problem Solver as well as the best backhaul solution for wireless networks.
• On Oct. 28, Dell DCS announced a demonstration of their ARM 64-bit server, which utilizes PMC’s 16-port 12Gb SAS storage solution, at ARM TechCon 2013.
• On Sept. 4, PMC became the only supplier of an end-to-end 12G architecture from controller to SSD with the introduction of Adaptec Series 8 12Gb SAS RAID Adapters. 12Gb SAS architecture is optimized to deliver the performance, flexibility and density needed for dynamic data in cloud computing, content delivery networks, and mission-critical database applications.
• On July 15, PMC announced the completion of its previously announced intention to acquire IDT’s Enterprise Flash Controller business, strengthening the company’s position as a leader in the rapidly growing enterprise SSD market segment.
• On June 5, PMC introduced WinPath4, a backhaul processor that enables mobile operators to scale capacity in their backhaul networks while transitioning to Layer 3 Packet Transport Networks. WinPath4 eliminates network bottlenecks caused by the growing deployment of 4G LTE.
• On June 3, PMC announced expansion of its Adaptec storage product line with the low-profile, 24-port, PCIe Gen3 6Gb SAS/SATA RAID adapter, enabling new dense architectures for scale-out or space-limited data centers. With 24-port native connectivity, the Adaptec 78165 triples storage connectivity by replacing up to three eight-port RAID adapters, and more than doubles the performance of competing solutions, reducing cost and power.
• On Mar. 18, PMC introduced DIGI 120G, a single-chip OTN processor supporting 10G, 40G and 100G speeds for OTN transport, aggregation and switched deployments. To meet the elastic traffic demands of big data, DIGI 120G allows for efficient sharing and the dynamic assignment of network resources, enabling OTN networks to effectively virtualize optical network bandwidth. This level of silicon integration facilitates cost effective designs, engineering efficiency, and lowest power approach to OTN system solutions.
• On Feb. 20, PMC expanded its Adaptec storage product line with the high-density, low-profile encrypted PCIe Gen3 HBA family. This product line is capable of executing over one million IO/s with 6.6 GB/s sustained throughput, provides 256-bit AES encryption, and offers up to 16 ports. The Adaptec Series 7H and 6H families of SAS/SATA HBAs provide customers with high-performance connectivity for HDD drives, SSDs, removable media and tape drives. The product family is suited for high-performance data center applications.