ANADIGICS, Inc. (ANAD)
Q2 2010 Earnings Call
July 29, 2010 08:30 am ET
Mario Rivas - Director, President and CEO
Tom Shields - EVP and CFO
Patrick Newton - Stifel Nicholas
Anthony Stoss - Craig-Hallum
Michael Alexander - Charter Equity Research
Aalok Shah - D.A. Davidson & Co.
Good morning my name is Brooke and I will be your conference operator today at this time I would like to welcome everyone to the ANADIGICS Second Quarter Conference Call, all line have been placed on mute to prevent on any background noise. After the speakers remark there will be a question and answer session [Operators Instructions]. On today's call we have Mario Rivas, CEO and Tom Shields CFO. Thank you Mr. Shields you may begin your conference.
Thank you operator, good morning everyone and welcome to the ANADIGICS second quarter 2010 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 contained forward looking information such information is subject to risks and uncertainties as described in this mornings press release and in the company's various filings with the SEC
I would like now to turn the call over to Mario for his opening remarks.
Thank you Tom, and good morning everyone, I am very pleased to report that the ANADIGICS team delivered a very solid quarter, generated income on both a GAAP and non-GAAP per share basis, of one and two pennies respectively, achieving profitably in the second quarter or several quarters ahead of our prior expectation, and it's a strong testament to the successful acquisition of our stated initiatives. Our revenue in the second quarter was $51.7 million representing 18.7% sequential growth as compared to our prior guidance of 12%.
The second quarter marks our fifth consecutive quarter of sequential growth. Revenue for the quarter was stronger than expected due to higher than anticipated turns business which we were able to successfully build and ship in on short notice. Our results continue to benefit from the significant new product pipeline and the design wins reported in prior calls. Revenue in the quarter was driven by 26% sequential increase in wireless, coupled with a moderate increase in broadband.
In the broadband space, set-top box revenue increased 20% and was offset by declines in both WiMAX and wireless LANs revenue. Relationship with customers are stronger than ever. With our top customers in the quarter, in comprise of comprised of Cisco, LGE, RIM, Samsung, World Peace and DTE. Another milestone achieved in the second quarter was our gross profit of 35.6%, reflecting a sequential increase of 330 basis point, better than our prior expectations. I would now like to give you an update on our 2010 strategic initiatives, which includes maintained profitable growth, continue to leverage our operational excellence and your ongoing introduction of superior products that will enable us to capitalized on the fast growing 3G and 4G markets.
Let's talk about profitable growth. We have established profitable growth with our second quarter non-GAAP profit of $0.02. Our commitment of maintaining profitable growth is again evidenced through our financial guidance for the third quarter of 2010, with revenue of $57.5 million and non-GAAP profit $0.04 per share. As we continue to scale, we expect to realize additional operational leverage. With 2011 been an optimal year for the company.
Turning to operational excellence, as we continue to scale operations performance impeccably on 25 cycle averaging less than 30 days and yield to mid to high 90s. Our manufacturing performance is world class; we are also making head way with our strategic foundry win, having run several markets for the products which are back in the lab.
We remain very excited in our opportunities with customers for our strong quarter products into fast growing 3G and 4G markets. The demand for the recently launched integrated L3 PAs and our L3 plus corporate products remained strong. We consistently hire tax rates across many customers globally. These products combined with our recently announced new family of HELP4 wideband CDMA single-band power amplifiers are a major hit with customers especially if the HELP4 family enables 75% longer battery life than our competitors.
Moreover, the continued expanded high demand of wireless connectivity in a growing number of consumer devices including smart phones, datacards, netbooks, notebooks and tablets provide for substantial opportunities for ANADIGICS. Just think, by the end of 2010 the 3G market is expected to be roughly 25% of the handset market with a forecasted compound annual growth rate upgraded on 30% through 2014.
The opportunities for ANADIGICS don't stop with 3G. ANADIGICS is well positioned to capitalize in the evolution of the 4G LTE market. In fact ANADIGICS has been at the forefront of the LTE market since sampling LTE products as early as February 2009. Our highly favored L4 LTE power amplifier is specifically tailored to cover UNTS and LTE bands one, two, four, 12 and 13. According to ABI Research, there are approximately 132 networks with trials or plans to launch LTE.
In the United States, a leading carrier will be rolling out 4G LTE networks to 25 to 30 markets this year with the anticipation of doubling that deployment in the next 15 months. Anadigics is addressing DLC markets through products for USB modules, new generation handsets and Femtocell. Speaking of Femtocell, Anadigics was one of the earliest companies to design and build Power Amplifiers, optimized for the Femtocell market and announce two new Power Amplifiers in mid May, which we are actively sampling and receiving very positive feedback. This marking according to Femto Forum will expand to approximately 49 million Femtocell at this point by 2014 with 114 million users worldwide.