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Trident Microsystems CEO Discusses Q3 2010 - Earnings Call Transcript

Trident Microsystems CEO Discusses Q3 2010 - Earnings Call Transcript

Trident Microsystems, Inc. (



Q3 2010 Earnings Call

October 26, 2010 05:00 p.m. ET


Sylvia Summers – Chief Executive Officer

Pete Mangan – Executive Vice President and Chief Financial Officer

John Swenson – Director, Corporate Finance & Investor Relations


Rajvindra Gill – Needham & Company

Sean Boyd – Westcliff Capital Management



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Good day ladies and gentlemen, and welcome to the Q3 2010 Trident Microsystems Earnings conference call. My name is Yvette, and I will be your operator for today. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. John Swenson. Please proceed, sir.

John Swenson

Thanks operator. Good afternoon, and welcome to Trident Microsystems Conference call for the Q3, ending September 30, 2010. After the market closed today, Trident issued a press release discussing results for the quarter. The release is accessible online at

. This call is being broadcast live over the web, and is accessible using the link found in today’s earnings press release. A replay of the webcast will be available starting tomorrow by accessing the Investor Relations section of Trident’s website.

Before we begin, please note that during this call, we will make forward-looking statements. These include comments related to guidance on anticipated revenues and operating losses, the phase of restructuring, and the degeration activity, future product shipments, and other statements. We are not obligated to update these statements.

Actual results may differ materially from the forward-looking statements made today, and have in fact done so in the past. These projections or forward-looking statements are subject to certain risks and uncertainties. These risks include in particular our ability to realize the benefits from our acquisition of product lines in IP from NXP, our ability to reduce expenses, the timing of new product introductions, the ability to obtain design lens among major OEMs for Trident’s products, the availability of wafers from our suppliers, and competitive pressures including pricing and competitors new product introductions, the impact of the uncertain global macroeconomic environment, the increasingly competitive DTV and semi-conducter market, and our ability to retain key employees globally.

These and other factors are discussed in our press releases and in the company’s filings with the SEC. We encourage you to read these documents and to come to your own conclusions about the risks and uncertainties inherent in Trident’s business.

Also please note, we will present non-GAAP financial information in this call. For reconciliation of our non-GAAP information to the most comparable information under GAAP, please refer to our earning’s press release.

Okay, on today’s call from Europe is Sylvia Summers, Trident’s CEO; and here in Sunnydale is Pete Mangan, Trident’s Executive VP and CFO. Pete will review the financial results for the quarter, and Sylvia will follow with further discussion of Trident’s business. Finally, Pete will provide guidance for the fourth quarter, and we will then open the calls for questions.

Now I’ll turn the call over to Pete Mangan. Pete.

Pete Mangan

Thank you, John. Welcome everyone, and thank you for joining the call today. I’m very pleased to present the results for Q3 of calendar year 2010. Here are a few highlights: Net revenues for Q3 came in at $176.6 million, which was 3% higher than the prior quarter, and in line with our guidance. TV products, compared to the prior quarter, were up slightly, to $129.5 million, or 73% of total revenues. For TV, discreet products grew 15% in the quarter, an offset of decline in SOC products which was primarily the result of supply constraints. Set top box products grew in the quarter by 9%, to $47.1 million. Overall, by category, TV discreet products represented 43% of our sales, followed by TV SOCs at 30% and set top box products at 27%.

Sales by customer for the quarter showed Samsung with our number one, with 19% of total revenues, while Phillips, our number two, remained at 14%. Geographically, Korea represented 31% of revenues, EMA 26%, AsiaPac 21%, Japan 13%, and America 9%. The distribution channel represented 29% of revenues. For Q3, blended ASPs for the company were flat with the prior quarter at approximately $3.40.

Non-GAAP gross margins of 33.7% were in line with our guidance, and represented a 4 point improvement over the prior quarter. The improvement was driven by product mix, with both a richer mix of TV discreet products and SOCs. GAAP gross margins for the quarter, which include the impact of amortization related to the NXP acquisition, were 27.3%.

For Q3, non-GAAP operating expenses were $59.6 million, down 10%, or $6.7 million from the prior quarter, and in line with guidance. The reduction OPEX was primarily driven, as expected, by a significant reduction in transitional support services from NXP. The non-GAAP operating performance for the quarter was essentially break even, and was $7 million better than guidance. This was a $15 million improvement from Q2, and was fairly evenly split with benefits both above and below the line.

Our non-GAAP net loss of $0.0 million compared to a net loss of $14.6 million, or $0.08 per share in the prior quarter. GAAP net loss for the quarter was $17.5 million, and principally includes the following GAAP adjustments; $13.7 million of intangibles amortization, $2.3 million of restructuring, and $1.9 million of stock based compensation. For additional information, please refer to the GAAP to non-GAAP reconciliation tables in the earnings press release.

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