Mellanox: Fiscal 1Q08 Financial Results

Mellanox Technologies, Ltd. announced financial results for its first quarter ended March 31, 2008.

In accordance with U.S. generally accepted accounting principles (GAAP), the company reported record revenue of $25.2 million, up from $24.8 million in the fourth quarter of 2007 and up 49 percent from the $16.9 million reported in the first quarter of 2007.

Gross margins in the first quarter were 76.4 percent, compared with 73.8 percent in the fourth quarter of 2007 and 74.7 percent reported in the first quarter a year ago. GAAP net income in the first quarter was $4.6 million or $0.14 per diluted share and included a tax expense of $2.1 million from the realization of deferred tax assets and $1.9 million of share-based compensation expense.

On a non-GAAP basis, the company recorded first quarter net income of $8.6 million, or $0.25 per diluted share, compared with $8.8 million or $0.26 per diluted share in the fourth quarter of 2007 and $3.9 million or $0.12 per diluted share in the first quarter of 2007. These non-GAAP net income results exclude share-based compensation expenses and the realization of deferred tax assets.

Total cash and investments were $155.3 million at March 31, 2008. The company generated $3.3 million of cash from operations during the quarter.

“Our seventh consecutive quarter of record revenue highlights our continued growth across all markets that we serve,” said Eyal Waldman, chairman, president and CEO. “We are seeing increased design wins and deployments of our leading interconnect adapters and switch silicon in a variety of new systems, applications and markets.

“During the quarter, we announced general availability of our ConnectX 40Gb/s InfiniBand adapter ICs and cards, the industry’s highest performing I/O adapter for server, storage and embedded applications. We taped out the InfiniScale IV, 36-port 40Gb/s InfiniBand switch silicon device in early April, which we expect to deploy in our customers’ systems during the second half of this year.

“At the Storage Networking World conference earlier this month, we demonstrated the industry’s first integrated Fibre Channel over Ethernet adapter with hardware offload. This capability enables networking and storage consolidation over a 10GigE network, reducing the number of adapters, cables and switches,” Mr. Waldman said.

“We also announced Virtual Protocol Interconnect (VPI), which enables ConnectX to support any standard networking, clustering, storage and management protocol over any converged network with the same software stack. VPI future-proofs data center infrastructure by providing IT managers the freedom to select the optimal protocols and networks for their applications while using ConnectX as their preferred server and storage adapter.

“We announced a significant design win with Supermicro, which is using our ConnectX 10 Gigabit Ethernet silicon adapter embedded in a LAN on Motherboard application for its server product line. This design win demonstrates Mellanox as a broad-based supplier of interconnect products.”

Mellanox Technologies, Ltd.