NEI Announces Financial Results For The First Fiscal Quarter 2010

CANTON, Mass., Jan. 28 /PRNewswire-FirstCall/ -- NEI (Nasdaq: NENG), a leading provider of server-based application platforms, appliances, and support services for software developers and OEMs worldwide, today reported financial results for its first fiscal quarter, the period ended December 31, 2009.

First Quarter Financial Performance

• Net revenues were $43.9 million, at the high end of the Company's guidance of $39 to $44 million and an increase of 8 percent compared sequentially to the $40.7 million in the fourth fiscal quarter of 2009 and 18 percent compared to the $37.2 million for the first quarter of the prior fiscal year. The increase both sequentially and year-over-year was due to increased volume from certain customers and the initial contribution from the two significant design wins from fiscal 2009.
• Gross profit was 13.7 percent of net revenues, within the guidance of 13.5 to 15.0 percent and compared sequentially to 15.0 percent in the fourth fiscal quarter of 2009 and compared to 15.1 percent for the first quarter of prior fiscal year.
• Operating expenses were $5.9 million, including $274,000 of stock-based compensation expense and $389,000 of amortization expense, better than guidance of between $6.2 million to $6.7 million. Operating expenses compared to $6.1 million in the year-ago first quarter, which included $304,000 of stock-based compensation expense and $439,000 of amortization expense.
• Net income on a GAAP basis was $139,000, or $0.00 per share, which included $312,000 of stock-based compensation expense and $389,000 of amortization expense. The results were better than guidance of a net loss of $(600,000) to breakeven. The net income on a GAAP basis compared to a net loss on a GAAP basis of $(466,000), or $(0.01) per share in the first fiscal quarter last year, which included $339,000 of stock-based compensation expense and $439,000 of amortization expense.
• Non-GAAP net income, which excludes stock-based compensation and amortization expenses, was $840,000, or $0.02 per share, better than the guidance of non-GAAP net income of $100,000 to $700,000. The non-GAAP net income compared to non-GAAP net income of $312,000, or $0.01 per share in the first fiscal quarter of 2009.

Greg Shortell, President and Chief Executive Officer of NEI, commented, "The first fiscal quarter was a positive quarter for us, and it sets the stage for a strong year. We met or exceeded guidance once again, and showed both sequential and year-over-year improvements in revenue and net income while maintaining a strong balance sheet. As expected, the significant design win with our largest customer announced in the fourth fiscal quarter last year began to contribute to our results in the December quarter, and we expect this to ramp to more than $10 million per quarter in incremental revenue in the coming quarters. We continue to pursue high-volume run-rate opportunities."

During this quarter NEI added eight new design wins, compared to 11 design wins in the first quarter of fiscal 2009. The Company now tracks design wins as only those with new customers, or with entirely disparate divisions within existing customers, representing a change from last year. Applying that same criteria to previous results, the Company had five first quarter design wins last year. Two of the eight design wins this quarter were run rate customers. EMC comprised 40 percent of total revenues during the quarter, compared to 33 percent in the year ago quarter and Tektronix comprised 21 percent of net revenues during the quarter compared to 14 percent in the year ago quarter.