Silicon Image Inc. (SIMG)
Q2 2010 Earnings Call
July 27, 2010 05:00 pm ET
Mike Bishop - IR
Camillo Martino - CEO
Noland Granberry CFO
Rajiv Gill - Needham & Company
Richard Shannon - Northland Securities
Christopher Longiaru - Sidoti & Company
Todd Cohen - MTC Advisors
Welcome to Silicon Image’s Second Quarter 2010 Earnings Conference Call. Just a quick reminder, today’s call is being recorded.
Now, at this time I’ll turn things over to our host Mr. Mike Bishop. Please go ahead sir.
Previous Statements by SIMG
» Silicon Image, Inc. Q1 2010 Earnings Call Transcript
» Silicon Image Q4 2009 Earnings Call Transcript
» Silicon Image, Inc Q3 2009 Financial Results Conference Call
Thank you. Good afternoon and welcome to the Silicon Image’s second quarter of 2010 financial results conference call. I’m Mike Bishop from Silicon Image’s Investor Relations.
Joining me today is Camillo Martino, the Company’s Chief Executive Officer, and Noland Granberry, the Company’s Chief Financial Officer. The agenda for today’s call includes a discussion of the financial results and a 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 third 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 operating expenses.
Our actual results may differ materially from these forward-looking statements. And we disclaim any obligation to update any of our forward-looking statements. Moreover, the forward-looking statements and the company’s future results are subject to 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 second quarter 2010 financial results press release, which is available on the Investor Relations section of our website at www.siliconimage.com.
And with that, I’d like to turn the call over to Camillo. Please go ahead.
Thanks Mike. Good afternoon and thank you for participating on our conference call today. Silicon Image had a great quarter. I’m looking forward to providing you some color on our results. I will first give a brief overview of the company’s performance followed by a market updates, and then Noland will go through the numbers in more detail and provide an outlook for Q3.
Today, we reported Q2 revenue of $44.6 million, and then we’re pleased to say, we swung to a profit on both a GAAP and non-GAAP basis. Non-GAAP net income was approximately $2 million or $0.03 per share exceeding our guidance due to robust demand for our products.
As we anticipated, when we gave our Q2 guidance back in April, our port processors featuring InstaPort and InstaPort is drove revenue growth. In addition, we experience broad-based traction across most of our product portfolio that drove revenue levels up above expectations.
As Noland and I will highlight later, we expect this momentum will carry over into the third quarter, as well. Product revenue showed growth in the quarter increasing 46% quarter-on-quarter with Japan leading the way, showing an 87% increase. APAC, including China, increased 61% and Korea increased 31%.
As has been widely reported, there continues to be an industry-wide supply chain constraint. However, we were still able to exceed our revenue objectives for the quarter. There were a couple of very solid trends in effect that drove product revenue during the quarter.
First, the number of digital TVs produced annually is increasing. The industry research firm DisplaySearch estimates that there were approximately 160 million units shipped in 2009, for 2010 they estimate they were 204 million digital TVs being shipped. This represents an increase of 28% this year.
Additionally, our market share within digital TVs has increased due to the fact that we are now shipping products that address both the mainstream and high-end market segments.
Outside of the digital TV space, our mobile product line is starting to see traction in HDMI-enabled smartphones. In addition, the home theater market segment, which includes audio/video receivers, and Blu-ray players did well, especially in Japan. Japan is unique and there is both a substantial producer and consumer of Name-Brand consumer electronics products.
Starting in 2009 and extending through 2010, the Japanese government implemented echo points, and this is an incentive program that encourages the purchase of energy efficient products. This program is lifting demand for many consumer electronics products that include Silicon Image ICs.
The growth in the [array] support-driven revenue confirms our strategy of providing standard plus port processes designed to co-exist with the digital TV to SoC. Consistent with what we said last quarter, we strived to offer the market products that are both compliant with industry standards and incorporate our latest enhancements and innovations. Our product strategy is to launch new products on an annual cycle, aligned with our customers’ product development schedule.
Our products feature new innovations and technologies that become designed into each year’s new models, providing a compelling value proposition to consumer electronics manufacturers.