SST: Fiscal 3Q09 Financial Results

SST (Silicon Storage Technology, Inc.) announced results for the third quarter, ended September 30, 2009.

Net revenues for the third quarter were $71.3 million compared with $58.1 million in the second quarter of 2009 and with $92.4 million in the third quarter of 2008. Product revenues for the third quarter of 2009 were $61.8 million, compared with $51.8 million in the second quarter of 2009 and with $79.8 million in the third quarter of 2008. Revenues from technology licensing for the third quarter of 2009 were $9.5 million, compared with $6.3 million in the second quarter of 2009 and with $12.6 million in the third quarter of 2008.

Income from operations for the third quarter of 2009 was $1.5 million compared with a loss from operations of $7.5 million in the second quarter of 2009 and with income from operations of $4.1 million in the third quarter of 2008.

Net income for the third quarter of 2009 was $3.1 million, or $0.03 per share, based on approximately 95.9 million diluted shares. By comparison, the company recorded a net loss of $6.4 million, or $0.07 per share, based on approximately 95.7 million diluted shares in the second quarter of 2009. For the third quarter of 2008, SST reported net income of $4.9 million, or $0.05 per share based on approximately 99.7 million diluted shares.

SST finished the third quarter of 2009 with $143.8 million in cash, cash equivalents, short-term investments, and long-term marketable debt securities, up approximately $8.5 million from $135.3 million at June 30, 2009.

"This was a productive quarter for SST as we executed well on our strategy and returned the company to profitability ahead of our expectations," said Bing Yeh, chief executive officer. "Seasonally strong demand in NOR flash memory, as well as a stabilizing pricing environment, resulted in healthy sequential growth in unit shipments and improved product revenues across all four of our application segments. Over the past few quarters, we have signed several new licensing agreements for our embedded SuperFlash program, which will begin to contribute upfront fee revenue in the fourth quarter as we make progress on deliverables. These new licensing agreements will help drive royalty growth in our licensing business in future years. We continue to manage our expenses closely and operate our business conservatively, but we are optimistic about the opportunities in our markets and we believe that we are laying a solid foundation for growth in 2010."

Fourth Quarter 2009 Outlook
Taking into account normal seasonality, SST expects its fourth quarter revenues to be between $67 million and $72 million. Gross margin is expected to be between 30 and 32 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $21 million and $23 million. Our net income per share is expected to be between $0.00 and $0.03.