PMC: Fiscal 1Q14 Financial Results

(in $ million)	1Q13	1Q14
Revenue	125.2	126.5
Growth		1%
Net income (loss)	(8.5)	(4.2)

PMC-Sierra, Inc. reported results for the first quarter ended March 29, 2014.

Net revenues in the first quarter of 2014 totaled $126.5 million, a decrease of 0.3% compared to $126.9 million in the fourth quarter of 2013, and an increase of 1.0% compared to $125.2 million in the first quarter of 2013.

GAAP net loss in the first quarter of 2014 totaled $4.2 million, or $0.02 per share, compared to a GAAP net loss in the fourth quarter of 2014 of $15.7 million, or $0.08 per share.

Non-GAAP net income in the first quarter of 2014 totaled $16.0 million, or $0.08 per diluted share, compared to non-GAAP net income of $19.0 million, or $0.09 per diluted share, in the fourth quarter of 2013.

“2014 is off to a solid start as we continue to build momentum in both our storage and server businesses,” said Greg Lang, PMC president and CEO. “First quarter revenue and non-GAAP EPS came in above the midpoint of our expectations, driven by strong demand for our flash and OTN products. We are optimistic about the growing interest in our product offerings and believe we are well positioned to capture market share in the year ahead.”

Net income on a non-GAAP basis in the first quarter of 2014 excludes the following items:

$6.2 million stock-based compensation expense,
$12.3 million amortization of purchased intangible assets, and
$1.7 million of other adjustments.

The company announced the following in the first quarter of 2014:

On March 10, it announced the interoperability of its DIGI 120G OTN processor and Acacia’s AC100 100G Coherent module, enabling mass deployment of 100G OTN in metro networks, unlocking a 10-fold increase in fiber capacity and eliminating the need for new fiber. Demonstrating interoperability with Acacia’s module is an step to show that the ecosystem is ready for the 100G transition.
On March 6, it announced its exhibition at CeBIT in Hannover, Germany. PMC held several demonstrations at CeBIT featuring Adaptec by PMC Series 8 RAID adapters with maxCache Plus Tiering Software and 12Gb SAS HBA-based Software Defined Storage.
On February 11, Adaptec Series 8 card won the Enterprise RAID Card Innovation Award from ZDNet China.
On January 28, it was providing high-density storage connectivity support for the Open Compute Project (OCP). PMC’s 24-port RAID adapter enables the densest Open Rack storage capacity available today. A common scale-out configuration can now support connectivity for 360 drives per rack, a 33% increase in capacity.

Comments

Greg Lang, president and CEO:
"Storage revenues declined by approximately $3.7 million or 4% during the last quarter. While we saw continued strength in our flash controller products, these gains were more than offset by normal seasonality for the balance of our storage products.
"In terms of mix, storage represented 69% of total revenue.
"We continue to see strong interest in our flash controllers from next-generation cloud and enterprise data centers - customers as well as large flash memory manufacturers. Additionally, with the pending transition to Intel's Grantley platform, we're poised to benefit from the design wins that we already have in place when the transition to 12Gb SAS is expected to occur in the second half of this year.
"Q4 saw a nice increase in revenue from our flash controllers, Q2 is expected to be lower due to timing of these buildouts and the ramp of new customers. We continue to believe we can generate incremental annual revenue from this business in the $20 million to $40 million range of share and believe that in the future, a broader base of customers will give us better diversification and continued growth of this revenue stream.
"And now for our outlook for Q2 2014. We expect Q2 revenues to be in the range of $121 million to $129 million.
"And overall, we expect storage to be down a bit in Q2. We expect our core storage products to be roughly flat after the slow end market reports from Q1, and our flash revenue will be down a few million dollars after the initial buildout of the first major customer, with growth resuming in Q3."