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PMC-Sierra Reports Second Quarter 2011 Results
Friday, July 22, 2011

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Vancouver, BC, July 22, 2011--(T-Net)--PMC-Sierra, Inc., (Nasdaq:PMCS) or PMC, the semiconductor innovator transforming storage, optical and mobile networks, today reported results for the second quarter ended June 26, 2011.


Net revenues in the second quarter of 2011 were $171.0 million, a sequential increase of 9% compared with $157.4 million in the first quarter of 2011, and 6% higher than net revenues of $160.7 million in the second quarter of 2010.


In the second quarter of 2011, the Company reported GAAP net income of $16.7 million, or $0.07 per diluted share, compared with GAAP net loss in the first quarter of 2011 of $7.7 million, or $0.03 per share. Non-GAAP net income in the second quarter of 2011 was $40.2 million, or $0.17 per diluted share, compared with non-GAAP net income of $30.6 million, or $0.13 per diluted share, in the first quarter of 2011.


“Strength in our storage and optical businesses, combined with solid execution, resulted in a strong second quarter,” commented Greg Lang, president and chief executive officer of PMC. “PMC also made several product announcements during the quarter, reinforcing our leading position as the network semiconductor innovator. These announcements spanned the SAS 2 storage, optical networking and mobile connectivity markets.”


Net income on a non-GAAP basis in the second quarter of 2011 excludes the following items: (i) $7.0 million stock-based compensation expense; (ii) $1.2 million acquisition related costs; (iii) $11.0 million amortization of purchased intangible assets; (iv) $0.9 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; (v) $0.7 million of other items; and (vi) $2.7 million income tax provisions.


For a full reconciliation of GAAP net income (loss) to non-GAAP net income, please refer to the schedules included with this release. The Company believes the additional non-GAAP measures are useful to investors for the purpose of financial analysis. Management uses the non-GAAP measures internally to evaluate its in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company's core operating results. In addition, the measures are used to plan for the Company's future periods. However, non-GAAP measures are neither stated in accordance with, nor are they a substitute for, GAAP measures.


In the second quarter of 2011:

  • Storage
    • The Company announced that it has shipped more than 74 million 6Gb/s SAS system ports, establishing PMC as the leading provider of 6Gb/s SAS technology for storage systems and servers.
    • PMC introduced the Tachyon® SPCv SAS/SATA protocol controllers, which double the performance and port density of existing solutions and deliver more than 750,000 I/Os per second.
    • PMC also announced the industry's first true hardware 6Gb/s SATA/SAS RAID controllers with on-board DRAM cache for the entry-level market segment.
  • Optical
    • The Company introduced the POLO 40G, the industry's most advanced 40Gb/s System-on-Chip (SoC) solution for coherent optical networking.
    • FiberHome, one of China's leading fiber-optic communications equipment providers, selected PMC's HyPHY chipset for its FONST Series family of WDM optical transmission solutions.
    • PMC also announced quad-port EPON OLT SoC solutions, the first to integrate network power management and optical fiber diagnostics while supporting advanced traffic management and eliminating the need for a separate aggregation switch.
  • Mobile
    • PMC's Universal Front End 4 (UFE4) silicon received the NGN Leadership Award in the network technology category presented by NGN Magazine.

Second Quarter 2011 Conference Call


Management will review the second quarter 2011 results and share its outlook for the third quarter of 2011 during a conference call at 1:30 pm Pacific Time/4:30 pm Eastern Time on Thursday, July 21, 2011. The conference call webcast will be accessible under the Financial Events and Calendar section at http://investor.pmc-sierra.com/. To listen to the conference call live by telephone, dial 416-640-5926 approximately ten minutes before the start time. A telephone playback will be available after the completion of the call and can be accessed at 647-436-0148 using the access code 4123473. A replay of the webcast will be available for five business days.


Third Quarter 2011 Conference Call


PMC is planning on releasing its results for the third quarter of 2011 on October 27, 2011. A conference call will be held on the day of the release to review the quarter and provide an outlook for the fourth quarter of 2011.


Safe Harbor Statement


This release contains forward-looking statements that involve risks and uncertainties. The Company's SEC filings describe the risks associated with the Company's business, including PMC's limited revenue visibility due to variable customer demands, market segment growth or decline, orders with short delivery lead times, customer concentration, changes in inventory, and other items such as foreign exchange rates.


About PMC


PMC (Nasdaq:PMCS) is the semiconductor innovator transforming networks that connect, move and store digital content. Building on a track record of technology leadership, we are driving innovation across storage, optical and mobile networks. Our highly integrated solutions increase performance and enable next generation services to accelerate the network transformation. For more information visit www.pmc-sierra.com.


© Copyright PMC-Sierra, Inc. 2011. All rights reserved. PMC, PMC-SIERRA, “Enabling connectivity. Empowering people.” and Tachyon are registered trademarks of PMC-Sierra, Inc. in the United States and other countries, PMCS is a trademark of PMC-Sierra, Inc. Other product and company names mentioned herein may be trademarks of their respective owners.

 
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
                     
    Three Months Ended   Six Months Ended
    June 26,   March 27,   June 27,   June 26,   June 27,
    2011   2011   2010   2011   2010
                     
Net revenues   $ 171,018     $ 157,434     $ 160,669     $ 328,452     $ 313,495  
Cost of revenues     52,663       59,161       50,064       111,824       99,069  
Gross profit     118,355       98,273       110,605       216,628       214,426  
                     
Other costs and expenses:                    
Research and development     56,421       54,499       43,646       110,920       85,713  
Selling, general and administrative     29,366       32,209       25,196       61,575       47,581  
Amortization of purchased intangible assets     11,031       11,021       6,816       22,052       16,652  
Restructuring costs and other charges     -       -       -       -       256  
Income from operations     21,537       544       34,947       22,081       64,224  
                     
Other (expense) income:                    
Gain (loss) on sale of investment securities     167       170       (429 )     337       (299 )
Amortization of debt issue costs     (50 )     (50 )     (50 )     (100 )     (100 )
Foreign exchange (loss) gain     (623 )     (1,474 )     74       (2,097 )     (915 )
Interest expense, net     (571 )     (924 )     (25 )     (1,495 )     (146 )
Income (loss) before provision for income taxes     20,460       (1,734 )     34,517       18,726       62,764  
Provision for income taxes     (3,725 )     (5,923 )     (4,411 )     (9,648 )     (5,671 )
Net income (loss)   $ 16,735     $ (7,657 )   $ 30,106     $ 9,078     $ 57,093  
                     
Net income (loss) per common share - basic   $ 0.07     $ (0.03 )   $ 0.13     $ 0.04     $ 0.25  
Net income (loss) per common share - diluted   $ 0.07     $ (0.03 )   $ 0.13     $ 0.04     $ 0.24  
                     
Shares used in per share calculation - basic     234,993       234,058       230,997       234,526       230,401  
Shares used in per share calculation - diluted     237,506       234,058       234,925       237,531       234,289  
 
As a supplement to the Company's condensed consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company provides additional non-GAAP measures for cost of revenues, gross profit, gross profit percentage, research and development expense, selling, general and administrative expense, amortization of purchased intangible assets, restructuring costs and other charges, other income (expense), provision for income taxes, operating expenses, operating income, operating margin percentage, net income (loss), and basic and diluted net income (loss) per share.
 
A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.  The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis.  Management uses these measures internally to evaluate the Company's in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company's core operating results.  In addition, the measures are used for planning and forecasting of the Company's future periods.  However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.  Other companies may use different non-GAAP measures and presentation of results.
 
PMC-Sierra, Inc.
Adjustments to GAAP Cost of Revenues, Gross Profit, Gross Profit Percentage, Research and Development Expense,
Selling, General and Administrative Expense, Amortization of Purchased Intangible Assets, Restructuring Costs and Other Charges,
Other Income (Expense), Provision for Income Taxes, Operating Expenses, Operating Income,
Operating Margin Percentage, Net Income (Loss), and Basic and Diluted Net Income (Loss) Per Share
(in thousands, except for per share amounts)
(unaudited)
                     
    Three Months Ended   Six Months Ended
    June 26,   March 27,   June 27,   June 26,   June 27,
    2011(1)   2011(2)   2010(3)   2011(4)   2010(5)
                     
GAAP cost of revenues   $ 52,663     $ 59,161     $ 50,064     $ 111,824     $ 99,069  
Stock-based compensation     (260 )     (223 )     (229 )     (483 )     (447 )
Acquisition related costs     (41 )     (9,064 )     (73 )     (9,105 )     (73 )
Non-GAAP cost of revenues   $ 52,362     $ 49,874     $ 49,762     $ 102,236     $ 98,549  
                     
GAAP gross profit   $ 118,355     $ 98,273     $ 110,605     $ 216,628     $ 214,426  
Stock-based compensation     260       223       229       483       447  
Acquisition related costs     41       9,064       73       9,105       73  
Non-GAAP gross profit   $ 118,656     $ 107,560     $ 110,907     $ 226,216     $ 214,946  
                     
Non-GAAP gross profit %     69 %     68 %     69 %     69 %     69 %
                     
GAAP research and development expense   $ 56,421     $ 54,499     $ 43,646     $ 110,920     $ 85,713  
Stock-based compensation     (2,927 )     (2,697 )     (2,181 )     (5,624 )     (4,345 )
Acquisition related costs     (97 )     (191 )     -       (288 )     -  
Non-GAAP research and development expense   $ 53,397     $ 51,611     $ 41,465     $ 105,008     $ 81,368  
                     
GAAP selling, general and administrative expense   $ 29,366     $ 32,209     $ 25,196     $ 61,575     $ 47,581  
Stock-based compensation     (3,859 )     (3,395 )     (3,253 )     (7,254 )     (6,222 )
Acquisition related costs     (1,051 )     (1,159 )     (1,453 )     (2,210 )     (1,453 )
Lease exit costs     -       (3,392 )     -       (3,392 )     -  
Non-GAAP selling, general and administrative expense   $ 24,456     $ 24,263     $ 20,490     $ 48,719     $ 39,906  
                     
GAAP amortization of purchased intangible assets   $ 11,031     $ 11,021     $ 6,816     $ 22,052     $ 16,652  
Amortization of purchased intangible assets     (11,031 )     (11,021 )     (6,816 )     (22,052 )     (16,652 )
Non-GAAP amortization of purchased intangible assets   $ -     $ -     $ -     $ -     $ -  
                     
GAAP restructuring costs and other charges   $ -     $ -     $ -     $ -     $ 256  
Restructuring costs and other charges     -       -       -       -       (256 )
Non-GAAP restructuring costs and other charges   $ -     $ -     $ -     $ -     $ -  
                     
GAAP other (expense) income   $ (1,077 )   $ (2,278 )   $ (430 )   $ (3,355 )   $ (1,460 )
Foreign exchange loss on foreign tax liabilities     260

PMC-Sierra

Burnaby, BC (InfoTech)
500 Employees In BC (1555 Total)
Founded: 1984 | Revenues: $531.00 Million

PMC is the semiconductor innovator transforming networks that connect, move and store digital content.

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PMC-Sierra

Posted: Jul 22, 2011

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