PMC-Sierra: Fiscal 3Q13 Financial Results

(in US$ million)	3Q12	3Q13	9 mo. 12	9 mo. 13
Revenues	131.7	128.9	401.6	381.9
*Growth*		-2%		*-5%*
Net income (loss)	(274.1)	(2.7)	(348.5)	(15.8)

PMC-Sierra, Inc. reported results for the third quarter ended September 28, 2013.

Net revenues in the third quarter of 2013 totaled $128.9 million, an increase of 1% compared to $127.9 million in the second quarter of 2013, and a decrease of 2% compared to $131.7 million in the third quarter of 2012.

GAAP net loss in the third quarter of 2013 totaled $2.7 million, or $0.01 per share, compared to a GAAP net loss in the second quarter of 2013 of $4.7 million, or $0.02 per share. Non-GAAP net income totaled $20.0 million, or $0.10 per diluted share, up 23% in the third quarter of 2013 compared to non-GAAP net income of $16.3 million, or $0.08 per diluted share in the second quarter of 2013.

“The third quarter played out largely as expected and we continued to execute well in a challenging environment,” said Greg Lang, PMC president and CEO. “We enter the fourth quarter well positioned with multiple growth opportunities and we remain committed to tightly managing our expenses.”

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

$5.9 million stock-based compensation expense;
$13.1 million amortization of purchased intangible assets; and
$3.7 million of other adjustments including income tax related as described in the accompanying GAAP to non-GAAP reconciliation table.

The company announced the following third quarter and recent announcements:

PMC established the company as the only supplier of end-to-end 12G architecture from controller to SSD by introducing the Adaptec Series 8 12Gb SAS RAID Adapters. Systems designed with PMC’s solutions can provide double the overall storage connectivity as competing solutions, with less components, space and power. 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.
PMC showcased performance demonstrations of its SAS flash manager and the industry’s first PCIe Gen 3 NVM Express flash controller at the 2013 Flash Memory Summit.

Comments

Abstracts the earnings call transcript: Greg Lang, president and CEO: "The storage segment represented 66% of total revenue, optical came in at 20% and mobile revenues came in at 14% of the total. The legacy portion of our revenue was approximately 6% of total revenue in Q3. "Our storage market segment was up 2% versus last quarter, slightly better than expected due to our SAS and RAID solutions. We saw a strength in our storage in server OEM business and our large customers, offset by lumpy days and our revenues in the third quarter. The traditional enterprise server and storage customers rebounded nicely after a weak Q2. "Now moving onto Flash. We're now 90 days into the acquisition of the IDT Flash controller business. "We're on track to reach production status by the end of the year with the world's first PCI Express NVMe controller. With thousands of production for all devices in the hands of our customers, we are on target for a Q1 production ramp. In addition, we have our 12-gig SAS controller production silica under final test and are also looking to a Q1 '14 production release. We expect revenue to ramp - to align with the rest of the 12-gig ecosystem in the second half of 2014." Steve Geiser, CFO: "In Q3, we had 2 customers, which each accounted for more than 10% of our revenues, calculated on a rolling 12-month basis, namely HP and EMC. "We expect Q4 revenues to be flat to down 8% from the third quarter, in the range of $118.5 million to $129 million."