Q2 2011 Earnings Call

August 4, 2011 8:30 AM ET


Thomas Shields – COO and CFO

Ronald Michels – CEO


Harsh Kumar – Morgan Keegan & Co., Inc.

Dale Pfau – Cantor Fitzgerald Securities

Quinn Bolton – Needham & Co. LLC

Edward Snyder – Charter Equity Research

Paul McWilliams – Next Inning Technology Research

Todd Koffman – Raymond James & Associates

Aalok Shah – D. A. Davidson & Co.



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Good morning. My name is Crystal and I will be your conference operator today. At this time, I would like to welcome everyone to the ANADIGICS Second Quarter’s Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Tom Shields, COO and CFO of ANADIGICS, you may begin.

Thomas Shields

Thank you, operator. Good morning, everyone, and welcome to the ANADIGICS second quarter 2011 earnings conference call.

Before we get started, please remember, any comments made in this call by management, as part of prepared remarks or in response to your questions, may contain forward-looking information. Such information is subject to risks and uncertainties as described in this morning’s press release and in the company’s various filings with the SEC.

I would now like to turn the call over to Ron Michels, CEO, for his opening remarks.

Ronald Michels

Thank you, Tom, and good morning, everyone. Thank you for joining us this morning. I would like to start this morning by providing a high-level overview of our revenue for the second quarter and then provide an update on our business activities since our last earnings call – our last conference earnings call.

This morning, we reported revenue for the second quarter of $35.6 million, which was sequentially down 18.1% but was in line with our previous range of guidance. As expected, wireless revenue declined sequentially by $10.6 million with the majority of this decline with RIM. Partially offsetting wireless in the quarter was an expected sequential increase in broadband revenue of $2.7 million attributing to strong shipments in cable infrastructure.

In regards to our third quarter outlook, I mentioned in our last earnings call that we – our hope was for revenue in the second quarter to be the trough in revenue for the company, but that I couldn’t be certain. Unfortunately, that uncertainty still exists with us today. The shift in our wireless customer mix, particularly to Korea and China, has led to very short order lead times.

Additionally, there is greater use of customers of hub arrangements – that’s consigned inventory are making it even more difficult to accurately forecast revenues. In light of these factors, although we continue to target our revenue plans on the basis of the second quarter being the revenue trough, we’ve decided to suspend our quarterly financial guidance. But let me repeat, we continue to target our revenue plans on the basis of the second quarter being the revenue trough.

As mentioned last quarter, achieving a competitive cost structure and aligning our expenses to the current revenue level are extremely important and we’ve made significant progress in this regard during the quarter and Tom will address these areas in more detail. I will focus my comments on the progress that we’ve achieved related to customers, reference design partnerships, new product development, as well as process development.

So let me begin with my top priority which is customers. During this last quarter I spent a great deal of time with all of our top customers and I would like to share some of the key takeaways as well as our company’s progress in each.

Starting with Samsung, I am pleased to report that we’ve received the top PA supplier rating from Samsung for our power amplifiers, and that’s based on our delivery, quality, technology, and responsiveness. We have three times the number of parts qualified with Samsung compared to a year ago, which I believe demonstrates the strength of our relationship and will prove to be a leading indicator of future engagements.

As further evidence of our progress, we have secured a very high profile design win on the Samsung Droid Charge, one of the top selling Verizon 4G smartphones. And with respect to LG, we have secured another high profile design win for the LG Revolution and our relationship continues to be strong with LG.

At ZTE, we are a top rated – we are rated in delivery quality, top rated there, and remained dominant on all the tablets and smartphones at ZTE. At Huawei, we recently received an award ranking us their number one PA supplier. And then lastly, in terms of RIM, while RIM is still ramping down as expected, we continue to work closely with them on new platforms for 2012.

It’s also important to note that we have a 90% share on the 3G Blackberry Playbook. The purpose of these customer meetings was simple, to encourage and strengthen our existing relationships and to foster collaboration and alignment of our product roadmaps. Collectively, I came away from these meetings more confident about ANADIGICS position with our customers and the opportunities we have before us to expand relationships in the future.

Now I would like to give an update on the dedicated team I have created to engage with our largest reference design partner. As I shared with you last quarter, I have implemented the strategy to further our business opportunities with Qualcomm and as a result, we have expanded our engagement on their future reference designs. These efforts have already generated reference design wins for us, both on the LTE Fusion and the Gobi 3K platforms. Most of our customers will be designing with the Fusion chipset, which is expected to ramp in 2012.

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