Please note that we are reporting non-GAAP financial measures for net income, gross profit and operating expenses in addition to our GAAP financial results. Due to the PTI acquisition last year, we have a significant amount of non-cash and non-operating-expense items included in the income statement, which are not reflective of the performance for our normal business operations.
Aaron will discuss the financial performance for the quarter, and Alex will give his comments on the industry and on Pericom’s business. Then Aaron will provide guidance for the fourth quarter of fiscal 2012. Aaron?
Thank you Bob, and good afternoon everyone. Our consolidated net revenues for the third quarter were $33.4 million, an increase by 10% from the 30.5 million reported last quarter, and decrease by 16% from the 39.6 million for the same period last year.
All end market segments were up sequentially except for consumer. The mobility and home appliance areas within consumer were flat quarter-to-quarter. PC and notebook shipments were up 12%, and approximately half of this growth came from initial shipments of our USB 3.0 products for the Ivy Bridge platform.The server segment was up 8% and storage increased 17%, as the shipments for hard disk drives improved. Networking and telecom continued to perform well, and was up 11%, while embedded grew 10% on a sequential basis. Sales by channel were: international distribution 64%; contract manufacturers 25%; OEM 9%; and U.S. distribution 2%. Consolidated non-GAAP gross profit was $12.1 million for Q3, compared with 11.4 million last quarter and 12.9 million last year. Non-GAAP gross margin for the third quarter was 36.2%, and was down 110 basis points from last quarter’s 37.3%, and 360 basis points higher than last year’s 32.6%. The sequential quarter gross margin decline was a result of unfavorable absorption expenses related to our FCP factories. Although the FCP volume increased 9% sequentially, the factories remained underutilized during Q3, at roughly 73% utilization. On a positive note, our IC gross margins exceeded 47% and PTI margins exceed 55%. If we exclude the FCP under-absorption expenses, we are not too far away from the targeted margin level of 38 to 40%. Our strategy is to increase penetration of our Gen Three USB PCI Express and clock products across server, networking and embedded applications for margin accretion and sustainable revenue growth.
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