Wolfson Microelectronics CEO Discusses Q3 2010 Results - Earnings Call Transcript
Wolfson Microelectronics (
)
Q3 2010 Earnings Call
November 4, 2010 05:00 am ET
Executives
Mike Hickey - CEO
Mark Cubitt - CFO
Analysts
Nick James - Numis
Robert Ernst - JPMorgan
Andrej Krneta - Jefferies
Ian Robertson - Seymour Pierce
Francois Meunier - Morgan Stanley
Tim Shaw - Citigroup
Didier - RBS
Dan Ridsdale - Edison Investment Research
Presentation
Operator
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Wolfson Microelectronics Plc Q1 2010 Earnings Call Transcript
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Sirius XM CEO Discusses Q3 2010 Results - Earnings Call Transcript
Good morning ladies and gentlemen and welcome to the Wolfson Microelectronics Plc Q3 Results Conference Call. Today, I'm pleased to present our speakers Mike Hickey, Chief Executive Officer and Mark Cubitt, Chief Financial Officer.
For the first part of this call, all participants will be in listen only mode. Afterwards there will be an opportunity to ask questions. Mike over to you.
Mike Hickey
Okay, thank you. Good morning and welcome to Wolfson Microelectronics third quarter result conference call. I am Mike Hickey, CEO of Wolfson and also present here is Mark Cubitt the company’s Chief Financial Officer.
Let me quickly take you through some of the key points of the third quarter and then we will be happy to take any questions. I am pleased to report that the promised impact of our class of 2009 designing reaching volume production was delivered in the third quarter. Despite being supply constraint, Wolfson achieved revenue growth over 30% sequentially and annually and for the first time since 2008 returned to profit underlying in full IFRS basis.
So in the third quarter of 2010, the financials were, revenues were up sequentially in year-on-year to $47.1 million, an increase of 31% and 33% respectively. Revenues were supply constrained in the third quarter due to customer equivalent mix changes and supply ramp issues. These are now result and we are no longer constrained by supply.
Gross margin was 49.7%; underlying operating profit was $3.2 million or 7% up 11 percentage points sequentially from Q2 2010 which is a 4% loss. Underlying diluted earnings per share also increased to $0.021 compared to $0.4 last year. Operating profit was 0.6 million compared to a 2.3 million loss in Q3 2009. Diluted earnings per share was $0.05 compared to $0.013 loss in Q3 2009.
Now let me talk about what happened from an application market perspective. We saw strong sequential revenue growth in mobile phones, gaming and accessories, Blu-ray DVDs and eBooks. Mobile phones grew 76%. Gaming consoles and accessories grew 82%, Blu-ray DVD grew 88% and eBooks were up a 148%. Sales were mainly flat in applications such as PCs, printers and automotive and lower portable navigation, portable audio applications and after a strong first half, televisions were also lower.
I am pleased to report that the positive momentum on revenue in profit is also evident in our design-ins and product loan performance. From a design-in prospective, the design-ins won in 2009 that continue into transition to volume manufacturer is previously outlined.
Around 80% have already transitioned and we still have some high value ones that will work their way through to revenue in 2011. Our strong design-in momentum was maintained, given a year-to-date today of 297, an increase of 55% year-on-year. This means we have already exceeded last year’s total of 254.
As well as the mobile handset design-ins, our audio hub and sub-system products were selected by multiple consumer electronic manufacturers including many Tier 1s for their new tablet PCs.
LG has selected Wolfson’s audio subsystem products recently launched, Optimus 1 and Optimus Chic Android-powered smartphones. Our design-in performance is driven by strong performance in the mobile segments with over a 100 new design-ins here today. This is a result of our ODL Hub in subsystem architectures becoming more widely adopted for handsets. This also increasingly is the case for many other applications such as tablet PCs, eBooks and for example one of our audio hubs were selected by leading Tier 1 TV manufacturer bringing HD audio to its new range of 3D and HD TVs.
In addition to the encouraging design-ins progress good product development performances continued with six new products being launched. These include Wolfson’s next generation HD audio for smartphones and other portable media application such as tablet PCs and eBooks. Two power management devices including the world’s highest current monolithic power management IC which is designed specifically for portable media players applications including smartphones, eBooks readers, media players and tablet PCs. And we also launched a new stereo line driver and immense transducer in new analogue front end digitiser for multi-function printers.
From a supply perspective, as I said earlier we were supply constrained in the third quarter of 2010. This was caused by some mixed changes in the quarter and buy some supplier ramp issues which are now resolved. The mixed changes were from products where we had supplied to products were supply was tight. And some reprioritization of supply to make the parts needed to key production lines running for some customers who experienced stronger than expected demand for their products. There are also some in the quarter’s supplier de-commits as they'd struggled to meet deep volume ramps on some products. These ramps have now been achieved.
Regardless of these issues we still managed to deliver over 30% growth in the quarter and have ramped supply by over 70% year-to-date very high industry wide supply environment. So in summary for Q3 revenues were supply constraint for the lower end of our expectations mainly because some of our supplies slip their ramps by a few days, there are now at the level we need them to be. However, the material thing is that the 2009 design-ins delivered in Q3, a significant step up in revenue over 30% sequentially and returned us to profit.
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