Integrated Device Technology Inc. (IDTI)
F4Q10 (Qtr End 03/28/10) Earnings Call Transcript
May 4, 2010 4:30 pm ET
Rick Crowley – VP & CFO
Ted Tewksbury – President & CEO
Betsy Van Hees – Wedbush Securities
Sandy Harrison – Signal Hill
John Barton – Cowen
Sukhi Nagesh – Deutsche Bank
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Good afternoon and welcome to the Integrated Device Technology Incorporated fiscal fourth quarter and year-end 2010 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions given at that time. (Operator instructions)
With that said, here with opening remarks is Integrated Device Technology’s Chief Financial Officer, Rick Crowley. Please go ahead, sir.
Thank you, Amber, and welcome to our fiscal fourth quarter and year-end 2010 earnings conference call. I'm Rick Crowley, IDT's Chief Financial Officer. And presenting with me on the call today is Ted Tewksbury, our President and Chief Executive Officer. Also in attendance on the call are Brian White, our Vice President of finance; Graham Robertson, our Vice President of Marketing; and Mike Knapp, our Manager of Investor Relations. We will all be available during the Q&A portion of this call.
Our call today will include remarks about future expectations, plans, and prospects for IDT, which constitute forward-looking statements for purposes of the Safe Harbor provisions under applicable federal securities laws. Actual results may differ materially from our forward-looking statements as a result of various important factors, including certain risks, which are detailed in IDT's most recent Annual Report on Form 10-K and quarterly report on Form 10-Q as filed with the SEC.
IDT does not intend to update the information provided in today’s call and expressly disclaims any such duty except as required by law. In addition, pursuant to regulation G, any non-GAAP financial measures referenced during today's conference call can be found in our press release posted on our website at www.idt.com, including a complete reconciliation to the most directly comparable GAAP measures. Also, we have made selected financial information available in webcast slides, which can be found in the Investor Relations section of our website.
Now, I’ll turn the call over to Ted who will provide some highlights on our fiscal fourth quarter and then I’ll return to give you more specifics on the March quarter, fiscal year-end results and our outlook for June. Ted?
Thanks, Rick, and thanks to all of you joining us today. We were pleased to deliver better-than-expected results in the March quarter, driven largely by broad based strength in our communications end market. We also experienced sequential revenue increases from our new product categories, including Serial Rapid IO, PCI Express, PC audio, and the initial ramp of our DisplayPort timing controllers and receivers for the PC market.
To recap, revenue of $138 million came in at the high end of the range that we provided last quarter. Gross margin of over 53% was better than anticipated, driven by improved product mix and we delivered non-GAAP of $0.09, $0.01 better than expected.
Let me now turn to our end markets to discuss some of the trends we saw in March as well some of the major themes that we believe will drive growth in this quarter and beyond. In communications, we experienced stronger demand in March than originally forecasted. Overall revenue from communications increased 8% sequentially on strength in sales of timing solutions and standard products.
Communications represented 48% of total revenue, up from 43% in the prior quarter. We anticipate that this strength in communications will continue into the June quarter. Additionally, we expect IDT to benefit from several major themes playing out over the next several year.
First, we expect to benefit from the roll out of fourth generation wireless infrastructure later this year. A number of companies have already announced deployments of LTE beginning in 2010, including Verizon, MetroPCS and US Cellular in the United States, NTT DoCoMo, and KDDI in Japan and TeliaSonera and Telenor in Europe. As you know, current generation networks are becoming increasingly strained by the explosion of wireless data traffic driven by new devices like tablets, smartphones, Netbooks, and mobile Internet devices.
The transition to 4G is necessary not only to provide the higher speeds and capacities to accommodate this traffic but also to provide new revenue streams for service providers. According to iSuppli 4G LTE base station unit shipments will grow at 120% compound annual growth rate over the next four years as service providers strive to relieve the bottlenecks in existing networks.
As the sole provider of Rapid IO switching solutions and the world leader in silicon timing, IDT has about $50 worth of content in most LTE and HSDPA base stations. In addition to ICs IDT’s has recently announced Rapid IO modeling tool enables our customers to accelerate their product developments and speed time to market for their fourth generation system designs.
Second, in the enterprise communications market, customers continue to differentiate their equipment using IDT timing, switching, and standard product solutions. We recently announced the expansion of our PCI Express switch portfolio with the industry’s most advanced switch architecture, optimized for communications, and embedded applications. According to iSuppli, the wireline communications market will increase 12% annually in 2010 and we expect to out grow that market as we expand our share with Tier 1 networking OEMs.
For our first fiscal quarter of 2011 ending in June, we expect revenue from communications to grow approximately 6% quarter-over-quarter, given our exposure to these key drivers.