Silicon Image, Inc. Q1 2010 Earnings Call Transcript

Silicon Image, Inc. Q1 2010 Earnings Call Transcript
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Silicon Image, Inc. (SIMG)

Q1 2010 Earnings Call Transcript

April 27, 2010 5:00 pm ET

Executives

Mike Bishop – IR

Camillo Martino – CEO

Noland Granberry – VP of Finance, Corporate Controller & CAO

Analysts

Christopher Longiaru – Sidoti

Raji Gill – Needham & Co.

Todd Cohen – MTC Advisors

Presentation

Operator

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Good day, everyone and welcome to the Silicon Image's first quarter 2010 earnings conference. Today's call is being recorded. At this time, I would like to turn the call over to Mike Bishop. Please go ahead.

Mike Bishop

Good afternoon and welcome to the Silicon Image's first quarter 2010 financial results conference call. I’m Mike Fisher from Silicon Image's Investor Relations. Joining me today is Camillo Martino, the Company's Chief Executive Officer and Noland Granberry, the Company's Vice President of Finance and Chief Accounting Officer.

The agenda for today's call includes the discussion of the financial results and the product and market strategy from Camillo. Noland will then provide a more in-depth discussion of the financial results and provide a financial performance estimates for the second quarter of 2010. We will then open the call for Q&A.

Before I turn the call over to Camillo, let me remind the listeners that we will be making forward-looking statements based on our current expectations during the call regarding many aspects of our business and the markets in which we operate, including, but not limited to forward-looking statements about our financial results and performance, our current and future products and technologies, the timing of new product introductions, average selling prices, design wins, market demand for our products and the anticipated impact of our operational infrastructure improvements on our business going forward.

Our actual results may differ materially from our forward-looking statements. Moreover, the forward-looking statements and the company's future results are subject to certain risks and uncertainties, which we described in today's press release, as well as in our filings with the SEC including but not limited to our most recent periodic reports on Forms 10-K and 10-Q. These documents describe certain relevant risk factors that could affect our future results.

I also want to mention that we have provided a financial metrics table and a reconciliation of non-GAAP financial information to GAAP information in our first quarter 2010 financial results press release, which is available on the investor relations section of our Web site at www.siliconimage.com.

And with that I’ll now turn the call over to Camillo.

Camillo Martino

Thank you, Mike. Thank you and thank you everyone for participating in our conference call today. This is a very exciting time at Silicon Image. We believe we have made a lot of progress on improving the company’s business and achieving an important milestone.

First, let me start by highlighting the quarter’s financial results. In the March quarter we performed better than anticipated. With revenue of $34.3 million above the top end of our revenue guidance range, with gross margins of 57.3% and a non-GAAP loss of $0.05 per share. The stronger than expected results were primarily due to increased customer activity, particularly, in licensing and continued and continued strong demand for our InstaPort-enabled HDMI port processors.

We believe that this increased customer demand is due to an improving consumer electronics market environment that features growing demand for new technologies such as 3D and InstaPort. With our active involvement in the industry leading HDMI standard and broad market adoption of our port processors, we are in a prime position to capitalize on this trend.

Given the increased demand for consumer electronics and the resulting tight supply of components within the overall semiconductor industry we continue to work proactively with our strategic suppliers to support our requirements.

On April 14, we along with Nokia, Samsung, Sony and Toshiba announced a formation of the MHL consortium. We’re very excited and pleased to have achieved this important milestone. I would touch on this more again in a few minutes.

Now, before turning the call over to Noland to cover our financial results in more detail, I would first like to discuss with you our overall strategy and then get into more detail about our products and technologies.

Our core competency has always been mixed signal serial connectivity. And we’re continuing to build on a heritage as we move into 2010. Our vision is to develop, market, sell and establish leading edge connectivity, technologies as industry standards for use in consumer electronics and mobile application. And we’re working with the world largest consumer electronics companies to bring these technologies to market.

However, we’re also focusing our efforts on developing and introducing new and innovative technologies on a regular and timely basis. We strive to offer the market our standards plus products that are both compliance with industry standards and incorporate our latest enhancements and innovations. In other words, we are dedicated to providing our customers with advanced functionality that is standard compliance but also goes well beyond the standard.

Our InstaPort technology is one example of this. Fast switching between ports is not part of the HDMI’s specification. However, we have developed and incorporated this technology into our HDMI-enabled products to make a compelling value-added offering.

Naturally, our customers are looking for a competitive advantage in the aggressive consumer electronics markets. And through our standards plus products model we believe that we provide our customers this competitive advantage.

We have strong relationships with the world’s top consumer electronics companies and we work closely with them to develop innovative technologies that will enable them to go to market with differentiated products. That not only our standards compliance, but are more feature rich.

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