SST: Fiscal 1Q09 Financial Results

Silicon Storage Technology, Inc. (SST) announced results for the first quarter, ended March 31, 2009.

Net revenues for the first quarter were $50.1 million compared with $58.4 million in the fourth quarter of 2008 and with $81.1 million in the first quarter of 2008. Product revenues for the first quarter of 2009 were $38.8 million, compared with $46.3 million in the fourth quarter of 2008 and with $69.7 million in the first quarter of 2008. Revenues from technology licensing for the first quarter were $11.3 million, compared with $12.1 million in the fourth quarter of 2008 and with $11.4 million in the first quarter of 2008.

Loss from operations for the first quarter was $6.3 million compared with a loss from operations of $10.8 million in the fourth quarter of 2008 and with a loss from operations of $4.6 million in the first quarter of 2008.

Net loss for the first quarter of 2009 was $9.2 million, or $0.10 per share, based on approximately 95.7 million diluted shares. By comparison, in the fourth quarter of 2008, the company recorded a net loss of $36.6 million, or $0.38 per share, based on approximately 95.5 million diluted shares. Included in the fourth quarter 2008 net loss were restructuring charges of $2.5 million, an impairment charge related to the company’s investment in Grace Semiconductor Manufacturing Corporation of $11.6 million and an impairment charge related to the company’s investment in ACET of $9.7 million. For the first quarter of 2008, SST reported net income of $1.5 million, or $0.01 per share based on approximately 104.0 million diluted shares.

SST finished the first quarter of 2009 with $125.7 million in cash, cash equivalents, short-term investments, and long-term marketable debt securities, down approximately $6.0 million from $131.7 million at December 31, 2008.

Management Qualitative Comments
"We are encouraged by the better than expected first quarter revenues given the current challenging economic environment," said Bing Yeh, president and CEO. "As we progressed through each month during the first quarter, we received more short-term purchase orders in memory products than we had initially projected. We had good results in our non-memory products, as well. However, ASP pressures, particularly in commodity memory, continue to impact gross margin performance and are likely to persist for several quarters. This pressure is the result of both weak end-market demand and manufacturing over-capacity in our industry. Therefore, our focus continues to be on executing our strategy of diversification and advancement of our technology roadmap, while reducing our inventory and streamlining our expenditures. In fact, as a result of our restructuring, our operating expenses decreased substantially in the first quarter. We are actively working towards the goal of returning the company to profitability and are managing our assets conservatively through this period."

Second Quarter 2009 Outlook
SST expects its second quarter revenues to be between $50 million and $56 million. Gross margin is expected to be between 25 and 28 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $22 million and $24 million. Net loss per share is expected to be between $0.12 and $0.08.