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TheStreet Open House

Vitesse Reports Third Quarter Fiscal Year 2012 Results

Stocks in this article: VTSS

Vitesse Semiconductor Corporation (NASDAQ: VTSS), a leading provider of advanced IC solutions for Carrier and Enterprise networks, reported its financial results for the third quarter of fiscal year 2012, ended June 30, 2012.

“Our vision and operational management continue to deliver, resulting in both operating and net income profitability this quarter,” said Chris Gardner, CEO of Vitesse. “Vitesse’s strategy to leverage our disruptive technology to gain share in the high-growth Carrier and Enterprise networking markets is also working. Innovations such as VeriTime™, our patent-pending distributed timing technology with the industry’s highest accuracy IEEE1588v2 timing, strengthen our market leadership.”

“While market challenges persist, we remain confident that our product development investments and solid execution will drive our revenue growth. Near-term, we see this trend with core revenue growing at 11% sequentially this quarter. Looking out, revenues from our new products will double from 2012 to 2013 and double again in 2014. In fact, the design wins expected to drive this revenue growth in 2013 are currently in or moving to production.”

Third Quarter Fiscal Year 2012 Financial Results Summary

  • Total net revenues were $30.3 million, compared to $29.7 million in the second quarter of fiscal year 2012 and $36.0 million in the third quarter of fiscal year 2011.
    • Product revenues were $25.7 million compared to $27.2 million in the second quarter of fiscal year 2012 and $31.9 million in the third quarter of fiscal year 2011.
    • The product lines contributed the following as a percent of product revenue as compared to the second quarter of fiscal year 2012:
      • Carrier networking products: 45.1% versus 35.3%
      • Enterprise networking products: 52.6% versus 48.3%
      • Core Carrier and Enterprise networking products: 97.7% versus 83.6%
      • Non-core products: 2.3% versus 16.4%

    • Intellectual property revenues totaled $4.6 million compared to $2.5 million in the second quarter of fiscal year 2012 and $4.1 million in the third quarter of fiscal year 2011.
  • Product margins were 56.2% compared to 61.0% in the second quarter of fiscal year 2012 and 57.8% in the third quarter of fiscal year 2011.
  • Operating expenses decreased to $16.9 million from $18.0 million in the second quarter of fiscal year 2012 and $22.2 million in the third quarter of fiscal year 2011.
  • Operating income was $2.1 million up from $1.1 million in the second quarter of fiscal year 2012 and $326,000 in the third quarter of fiscal year 2011.
  • Non-GAAP operating income was $3.3 million up from $2.3 million in the second quarter of fiscal year 2012 and $1.5 million in the third quarter of fiscal year 2011.
  • Net income, which included a $5.8 million gain on the embedded derivative, was $4.7 million, or $0.18 per basic and $0.16 per fully diluted share. This compares to a net loss, which included a $5.3 million loss on the embedded derivative, of $6.2 million, or $0.25 per basic and fully diluted share, in the second quarter of fiscal year 2012; and net income of $6.6 million, which included an $8.0 million gain on the embedded derivative, or $0.26 per basic share and $0.21 per fully diluted share, in the third quarter of fiscal year 2011.
  • Non-GAAP net income was $140,000, or breakeven per basic share and fully diluted share, compared to non-GAAP net income of $313,000, or $0.01 per basic and breakeven per fully diluted share, for the second quarter of fiscal year 2012; and a non-GAAP net loss of $202,000, or $0.02 per basic and fully diluted share, in the third quarter of fiscal year 2011.

Balance Sheet Data at June 30, 2012 as Compared to September 30, 2011

  • Cash balance increased to $20.6 million, compared to $17.3 million;
  • Accounts receivable totaled $10.7 million, compared to $9.6 million;
  • Inventory totaled $14.8 million, compared to $20.9 million; and
  • Working capital increased to $27.2 million, compared to $26.7 million.

Fourth Quarter Fiscal 2012 Outlook

For the fourth quarter of fiscal year 2012, ending September 30, 2012, Vitesse expects revenues to be in the range of $28.0 million to $31.5 million and product margins are expected to be between 55% and 57%. Operating expenses are expected to be between $18.0 million and $19.0 million.

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