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Intersil's CEO Discusses Q2 2012 Results - Earnings Call Transcript

One year ago, we introduced our top ten growth drivers for the first time. Since that time, they’ve provided clarity for our investors about the areas where we’re confident we can win in an increasingly competitive semiconductor market. But it has also been a catalyst for focusing resources within Intersil.

At our Analyst Day on May 8, we updated our top ten growth drivers, and provided a rough estimate for the growth trajectories in each area. We reaffirmed our conviction that these ten growth drivers will create an incremental $700 million in sales by 2016, five years from when that goal was first introduced last July.

At this point, nearly all of our development resources are focused on our top ten growth drivers. These are the carefully chosen product areas where Intersil has the technology, the talent and the customer relationships to much larger rival. During our Analyst Day, we also indicated that we were about to make significant operating expense reductions. We explained that these OpEx reductions amounting to $40 million per year in savings would allow Intersil to reach a non-GAAP operating profit margin of 24% at a $200 million per quarter revenue rate. In light of the soft economic conditions, we believe this reduced revenue goal is more achievable during the coming year.

Nearly all of these OpEx reductions were implemented during the second quarter, so the third quarter's profitability will be significantly improved. We’re now a lean, mean and focused product development machine, and expecting several of our top 10 growth drivers to begin generating significant growth in 2013.

I’d now like to talk briefly about the business conditions in the second quarter. Recovery from the latest semiconductor cycle began in the first part of the second quarter, however bookings weakened again in June, and as a result we closed the quarter with a book-to-bill ratio slightly less than one. Worries over weakness in the global economy, particularly in Europe had weight on all our end markets.

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