Spansion CEO Discusses Q3 2010 Results - Earnings Call Transcript

Spansion CEO Discusses Q3 2010 Results - Earnings Call Transcript
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Spansion Inc. (



Q3 2010 Earnings Call

October 26, 2010 04:30 pm ET


Shubham Maheshwari - IR

John Kispert - CEO

Randy Furr - EVP & CFO


Atif Malik - Morgan Stanley

Krishna Shankar - ThinkEquity

Rajiv Gill - Needham & Company

Joe Stauff - Susquehanna

Michael Cohen - MDC Financial Research



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Good day ladies and gentlemen and welcome to the Third Quarter 2010 Spansion Earnings Conference Call. My name is Alicia and I will be your coordinator today. (Operator Instructions).

I would now like to turn the call over to Mr. Shubham Maheshwari, FCP, Investor Relations. Please proceed.

Shubham M


Thank you and welcome to Spansion third quarter 2010 earnings conference call. On the call with me today are John Kispert, CEO and Randy Furr, CFO of Spansion. We will be referencing a slide deck during the portion of today’s call. You can download a copy of these slides from investor relations section of our website at under events and presentations.

Our call will be approximately 60 minutes in length. There will be an audio replay of this call. You may access that by dialing 1-888-286-8010, pass code is 37158275. A webcast replay will be available on the company’s website throughout this year. Please note the following Safe Harbor statement. During the course of this meeting, we may make projections or other forward looking statements regarding future events or the future financial performance of the company or the industry.

We caution you that such statements are based on current beliefs, assumptions and expectations as of the current date and involve risks and uncertainties that could cause actual results differ materially from our current expectations. We encourage you to review our filings with the SEC where we discuss the risk factors that could cause actual results to differ materially from our current expectation and those in the forward looking statements. You will find detailed discussions of these risk factors in our most recent SEC filing which include Spansion’s quarterly report on Form 10-Q for the fiscal quarter ended June 27, 2010 and annual report on Form 10-K for fiscal year 2009. The Company disclaims any duty to update forward looking statements.

With that I will now turn the call over to John.

John Kispert

Thank you, Shubham. Good afternoon and welcome to our fiscal year 2010 Q3 earnings conference call. Today I will highlight our results and update you on the market and our strategy, then Randy will give you the financial details for the quarter and the outlook for the fourth quarter and then finally we will field your questions.

And high level, we delivered another solid quarter executing against our plan and achieving improved results in a number of areas. We continue to improve non-GAAP earnings and achieved our fourth consecutive quarter of revenue growth in the embedded market. Our embedded revenues were up 15% over Q2. We also experienced an improvement in productivity as measured by output from our flagship manufacturing facility in Austin. In addition, we had all time highs in new age shipments out of all our final manufacturing facilities. This in course includes our back end partners.

Before I get into market segment trends and design wins, I’d like to address last Friday’s ITC Judges Initial Determination ruling. Some perspective first, these are only two patents of 16 patents we have assorted against Samsung and only two of our expansions overall 2300 patents. Second, these patents are not part of the four separate cases scheduled to go to trial over the next 18 months.

Since 2008 when we actually filed these first two patents we’ve discovered even stronger evidence of patent infringements. We will continue to fight against the misuse of our patents. Protecting our IP is a critical piece of our licensing strategy. We must defend the interest of our employees, customers, partners and licensees who have all put significant investment in our technology.

Now moving to revenue for specific segments and regions, we saw consistent growth and well as the first [flight] growth across all of our core embedded markets. You can slide four our revenue break downs by segments and by region. Expansion brings the unique focus to the embedded market by understanding the specific customer requirements and supporting their legacy as well as their next generation designs.

With hardware, software and off course system solutions. For the quarter, we believed we have gained 2 to 3 points of market share over the June ending quarter. In addition, we secured a number of new customer design wins across existing and new markets. For instance in the video entertainment segment, we have secured 10 new customers. Some of our customers are starting mass production later this quarter. With our 2 gigabyte MirrorBit Eclipse product we have demonstrated a high quality video experience for rich interactive graphics. The entertainment systems high quality graphics with two dimensional is soon to be released. 3D visual graphics require fast random reads and our 2 gigabyte equips NOR flash product with its fast random read speed is the best solution in the market for high definition video and Spansion is the only supplier with a 2 gigabyte NOR ready for production in the market today.

In set-top boxes, part of our consumer segment, we secured over 20 designs from the Top 8 world wide set-top box OEMs and we see new opportunities in emerging markets in China, eastern Europe, South America and India. The automotive segment here focuses on infotainment. Electronic clusters, navigation and of course under the hood applications across the entire range of cars from petrol to electric cars. This quarter we had secured an additional 15 new automotive design wins.

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