TranSwitch Corporation (
Q2 2011 Earnings Call
August 8, 2011 5:30 p.m. ET
Ted Chung, VP of Business Development
Ali Khatibzadeh – President and CEO
Robert Bosi – CFO
Dean Broyles – Stifel Nicolaus
Quinn Bolton – Needham & Company
Richard Shannon - Northland Capital Markets
Drew Burke – Game Plan Advisors
Quinn Bolton – Needham & Company
Previous Statements by TXCC
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Good day, everyone, and welcome to the TranSwitch second quarter 2011 Earnings Release Conference. As a reminder today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Ted Chung. Please go ahead sir.
Great. Thank you. With me here today are Dr. Ali Khatibzadeh, our President and CEO and Mr. Robert Bosi, our CFO.
Before I begin, I need to remind listeners that forward-looking statements made during this call, including statements regarding management’s expectations for future financial results and the markets for TranSwitch’s products are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
These risks are detailed in the TranSwitch’s filings with the Securities and Exchange Commission. With that out of the way, I will give some highlights for the quarter and hand it over to Ali for some more details.
For the fiscal second quarter of 2011, net revenues for the quarter were approximately $7.1 million within the guidance range provided on our last earnings call in February. Gross margins in the quarter improved to 67% up from the 64% reported in the March quarter. We also successfully completed the secondary offering and raise the net proceeds of $16.1 million. Bob will provide some more details on that later. Our largest customers in the quarter were Samsung Electronics and Alcatel-Lucent
of greater than 10% of our revenue.
Well, Alcatel-Lucent has longer than 10% customer, Samsung use either of these range
and this will selectively increasing importance of our video interconnect business.
At this time, I will now hand it over to Ali, so that he can share with you our progress during the quarter and some of his thoughts.
Thank you, Ted, and good afternoon ladies and gentlemen. As we projected in our last earnings call, the softness in our telecom business continued in to the second quarter and we expect this trend to continue in to the third quarter. However, we’re seeing indications of stabilization in Q3 and recovering this business as we move into the fourth quarter. As specifically our backlog for fourth quarter is pacing ahead of Q3, had the same point in the quarter.
I’ll discuss our telecom and overall business in details later. And of course let me saw with an update on our strategic growth and video connectivity products. As we have said on the number of occasions recently, by leveraging our differentiate technologies who are positioning ourselves to address three fast growing segments relating to high definition video connectivity market starting in 2012. One, the first one is the external HDMI DisplayPort IT Markets are by originally announced HDplay products, this market segment, we estimate to be about $600 million in addressable market by 2014. Second, there is a mobile smartphone and tablet market, video interconnect market, which is about $300 million in size.
And third, the high speed interface inside the flat screen TV and monitors, which is about another $200 million addressable market for us. So, roughly $1.1 billion new addressable market for TranSwitch, which we would be able to address, starting in 2012 with our new product. I’m happy to say that we’ve made significant progress on all three new initiatives in the quarter and I look for this progress to continue to accelerate as we move forward.
First with regard to the external HDMI and DisplayPort market in our HD play products, which are currently in this sampling phase, we have continuing the engagements with the number of customers around the world, many customers have indicated enthusiasm for our products, as a reminder the target market HD play includes televisions, video monitors, projectors, audio, video, receivers, digital signage and video switching equipment.
We see good reception for the four differentiators that HD play offers to our customers. One products offer dual HDMI and display modes, two greater than 10gigabit per second overall link speed, supporting new generation of high resolution 2k, 4k TVs, and full resolution 3D TVs at 60 hertz. Three internet connectivity feature which is now being required for a large percentage of new TVs, and four patented AnyCable technology delivering superior image quality over a low cost and long cables.
In addition to end customer engagements, we are also working with reference design partners that have strong channels into the end customers to accelerate the design-win process. These opportunities should contribute meaningfully to our revenue in 2012 and we expect the customer evaluation and designing process will continue throughout the rest of 2011 and beyond.
Second, on the mobile front we under development phase of our first video connectivity product with smartphones and tablets, while this would be a standard non-proprietary product, we have been collaborating closely with the top-tier OEM, who is helping to drive specifications and requirements for our products.
A solution has certain unique and differentiated features that make it attracted for a wide range of mobile applications. This product is targeted for second half 2012 launch, we will update you on the progress as we move forward.