Net sales in the fourth quarter of 2012 were US$70.6 million, a decrease of 8% compared with the previous quarter. For the quarter, mobile storage products accounted for 75% of net sales and mobile communications 21% of net sales.
Net sales of our mobile storage products, which primarily include flash memory cards, USB flash drives, SSD and embedded flash controllers, increased slightly sequentially in the fourth quarter to US$52.9 million.
Net sales of mobile communication products, which primarily include handset transceivers and mobile TV IC solutions, decreased 32% from the third quarter to US$14.9 million in the fourth quarter of 2012.Gross and Operating Margins Gross margin (non-GAAP) decreased to 44.6% in the fourth quarter from 46.4% in the third quarter of 2012. GAAP gross margin decreased to 43.0% in the fourth quarter from 46.3% in the third quarter of 2012. Operating expenses (non-GAAP) were US$17.8 million, which was higher than the US$15.8 million expended in the third quarter. Research and development expenditures (non-GAAP) were US$12.3 million, which was higher than the US$10.0 million in the previous quarter. Selling and marketing expenses (non-GAAP) were US$3.1 million, which was lower compared to the US$3.6 million in the previous quarter. General and administrative expenses (non-GAAP) were US$2.4 million, which was higher compared to the US$2.2 million in the previous quarter. Stock-based compensation was US$3.4 million in the fourth quarter, unchanged compared to the third quarter. There were no acquisition-related charges in the fourth quarter of 2012. Operating margin (non-GAAP) was 19.5%, a decrease from 25.9% in the previous quarter. GAAP operating margin was 13.2% for the fourth quarter, a decrease from 21.5% in the third quarter. Other Income and Expenses Net total other income (non-GAAP) was US$0.3 million, a slight decrease from US$0.4 million in the third quarter. GAAP net total other income was US$0.2 million, a decrease from a net total other income of US$0.8 million in the third quarter. The increase in GAAP net total other income was primarily due to a foreign exchange gain in the third quarter of US$0.4 million compared to a foreign exchange loss in the fourth quarter of less than US$0.1 million.
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