PMC-Sierra: Fiscal 2Q13 Financial Results

(in US$ million)	2Q12	2Q13	6 mo. 12	6 mo. 13
Revenues	137.8	127.9	269.9	253.1
*Growth*		-6%		*-6%*
Net income (loss)	(0.1)	(4.2)	(67.5)	(11.0)

PMC-Sierra, Inc. reported results for the second quarter ended June 29, 2013.

Net revenues in the second quarter of 2013 totaled $127.9 million, an increase of 2% compared to $125.2 million in the first quarter of 2013, and a decrease of 6% compared to $137.8 million in the second quarter of 2012.

GAAP net loss in the second quarter of 2013 totaled $4.2 million, or $0.02 per share, compared to a GAAP net loss in the first quarter of 2013 of $6.8 million, or $0.03 per share. Non-GAAP net income totaled $16.3 million, or $0.08 per diluted share, up 22% in the second quarter of 2013 compared to non-GAAP net income of $13.4 million, or $0.07 per diluted share in the first quarter of 2013.

"Our second quarter results were in line with our outlook despite the muted environment," said Greg Lang, PMC president and CEO. "The recent acquisition of IDT’s PCIe flash controller business further expands our growth opportunities and positions us as a leader in the rapidly growing enterprise SSD market segment."

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

$6.2 million stock-based compensation expense;
$10.8 million amortization of purchased intangible assets; and
$3.5 million of other adjustments including income tax related as described in the accompanying GAAP to non-GAAP reconciliation table.

Second quarter and recent announcements:

Strengthening the company’s position in the rapidly enterprise SSD market segment, it announced a definitive agreement to acquire IDT’s enterprise flash controller business and certain PCIe switch assets on May 29, 2013, which was completed on July 15, 2013.
It introduced WinPath4, a backhaul processor that enables mobile operators to scale capacity in their backhaul networks while transitioning to Layer 3 Packet Transport Networks (PTN). As the newest member of PMC’s WinPath backhaul processor family, WinPath4 eliminates network bottlenecks caused by the growing deployment of 4G LTE.
It announced further expansion of its Adaptec storage product line with a 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 June 6, 2013, it received the Excellence in Product Innovation award for its DIGI 120G multiservice OTN processor from the British Columbia Technology Industry Association.

Comments

Abstracts the earnings call transcript:

Greg Lang, president and CEO:
"Storage revenues were down $1.5 million, or 2%, reflecting continued weakness in enterprise spending. At the top level, the storage market segment represented 65% of total revenue.
"Our storage market segment (...) lower than expected due to continued sluggish enterprise spending. In fact, 5 of our 6 largest server and storage customers were down quarter-to-quarter after a disappointing Q1. But on a positive note, we continue to see healthy build-outs at our hyperscale data center customers offsetting most of the enterprise weakness. I'm pleased to report that the second quarter, we posted record revenues again in our data center products.
"To illustrate the leverage of our technology and hyperscale data centers, this past quarter, one of our largest data center companies - one of the largest data center companies in the world deployed 2,000PB of disk storage attached to PMC controllers, one of the largest single deployments in our history.
"In our SAS business, based on current design wins, we expect to increase our market share of the 12Gb transition by over 10% in servers and storage systems.
"Now on the 12Gb SAS flash controller front, our production silicon is back from fab last week. Our firmware is maturing on track and customer designs are underway. We expect to see revenue ramp in early 2014 for our initial customers and grow with the storage system's transition in the second half of 2014.
"Turning to our outlook, we expect Q3 revenues to be in the $126 million to $134 million range, up about 2% at the midpoint."

Steve Geiser, CFO:
"In Q2, we had two customers which accounted for more than 10% of our revenues, calculated on a rolling 12-month basis, namely HP and EMC.
"We ended the quarter with approximately $309 million of cash and cash equivalents, short-term investments and investment securities."