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Pixelworks CEO Discusses Q3 2011 Results - Earnings Call Transcript (Prepared Remarks)

Additionally, the Company's press release and management’s statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin, operating expenses, net income loss, and net income loss per share. These non-GAAP measures exclude restructuring charges, amortization of acquired developed technology, stock-based compensation expense, gain on sale of patents, gain on sale of marketable securities, and additional amortization of a prepaid royalty. We use these non-GAAP measures internally to assess our operating performance. The Company believes these non-GAAP measures provide a meaningful perspective on our core operating results and underlying cash flow dynamics, but we caution investors to consider these measures in addition to, not as a substitute for, nor superior to, the Company's consolidated financial results as presented in accordance with GAAP.

Included in the Company's press release are definitions and reconciliations of GAAP to non-GAAP net income/loss and GAAP net income/loss to adjusted EBITDA, which provide additional details.

Bruce will begin today’s call with a strategic update on the business, after which I will review our Q3 financial results and discuss our outlook for the fourth quarter of 2011.

Bruce Walicek

Thanks Steve. Good afternoon everyone and thank you for taking the time to join us today. Let me start out by making a few comments and observations about our third quarter 2011, and then Steve will follow with more details on our financial results.

The third quarter was a solid quarter of growth as revenues increased 11% sequentially, and came in at the midpoint of guidance. This increase was primarily driven by a rebound in our Advanced TV/Panel product line, as new customers ramped into volume production. TV/Panel products were 17% of revenue and were up 84% sequentially and 102% year over year. While overall book-to-bill was less than one reflecting customers providing less lead time on orders, the book-to-bill in TV/Panel products was 1.2 to 1, as we continued to have success with our PA series devices. Overall our new products continued their growth, rising 33% year over year, and up 21% sequentially. New products accounted for 56% of revenue during the quarter, up from 40% in the 3rd quarter of 2010, reflecting continued adoption and success across our product lines. Gross margin came in above the range of guidance and combined with topline growth and low end of the range operating expenses, resulted in positive EBITDA and positive cash flow from operations for the second quarter in a row.

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