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SHANGHAI, China, Feb. 10, 2014 (GLOBE NEWSWIRE) -- Montage Technology Group Limited (Nasdaq:MONT) ("Montage"), a global fabless provider of analog and mixed-signal semiconductor solutions addressing the home entertainment and cloud computing markets, today issued a statement addressing allegations contained in a purported research report issued by a firm that goes by the name of Gravity Research.
In direct response to certain allegations in the report, the company issued the following statements in support of the integrity of its business and financial statements:
Regarding Allegations about the Montage Sales Model:
As evident in Montage's filings with the U.S. Securities and Exchange Commission, revenue from sales through distributors is recognized on a "sell-through" basis, meaning revenue is recognized when delivery is made to Montage's more than 160 end customers worldwide. However, Gravity Research's report ignores this fact and appears to attempt to mislead the reader to incorrectly believe that Montage has a "sell-in" sales model, in which revenue is recognized when sold to the distributor, rather than when actually distributed to an end-customer. This sell-through approach applies to both the company's set-top box manufacturer customers and our memory module manufacturer customers.
Additionally, because a significant amount of our revenue flows through LQW Technology Company Ltd. ("LQW") as well as other distributors to end customers, the due diligence conducted by third parties in connection with the company's initial public offering and recently completed secondary offering process also addressed our relationship with LQW, including an interview with the General Manager of LQW in connection with our initial public offering.
Regarding Allegations about the Montage Revenue Reporting:
Gravity Research additionally alleges: "We do not believe that Montage's claimed revenue is real, and we do not believe that Montage has sufficient scale to be genuinely profitable. We also believe that Montage's business began deteriorating in the past and continued deteriorating to the point at which Management elected to invent LQW and go public on the US market."