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We were pleased that we saw some improvement in demand in the consumer electronics market as we entered 2010. A few positive indicators show that we continue to be well positioned to benefit from the anticipated market rebound in 2010. Our first quarter results reflect the solid demand for our high end products, particularly our Series 13 and Series 25 products [inaudible] in the QVGA and D1 segments respectively.In addition to our traction in sales diversification, we saw an improvement in our ASP, unit cost and gross margin, a decrease in our operating expenses and continued preservation of our cash position. Our results for the first quarter exceeded our guidance for the quarter as we began to see some positive indicators for a rebound in PMP demand. For the first quarter ended March 31, 2010 we recorded revenue of $7.9 million compared to $7.9 million in the fourth quarter of 2009. Our gross margin for the first quarter of 2010 was 39.6% compared to 34.9% for the fourth quarter of 2009. We are pleased to see continuing improvement in our gross margin has increased the shipments of our Series 13 and Series 25 products to a more favorable shift in our product mix and offset ASP erosion during the first quarter. We remain committed to our cost down activities which also contributed to improving our results although we expect that margins will remain [inaudible] in the near-term due to the ongoing presence of ASP pressure and competitive pricing. For the first quarter of 2010 total stock based compensation expense amounted to $1 million compared to $0.9 million in the fourth quarter of 2009. R&D expense was $4.5 million or 57.8% of revenue for the first quarter of 2010 which was flat with the fourth quarter of 2009. We expect our R&D expense to represent a higher percent of our revenue as we expand our resources by growing our pool of engineering talent working on next generation PMP products and new business initiatives.
During the first quarter we hired approximately 10 senior engineers who strengthened our R&D credibility. G&A expense was $1.7 million in the first quarter or 22.1% of revenue as compared to $2.2 million in the fourth quarter or 27.7% of revenue in the fourth quarter due to receiving the ADS related expense reimbursement from our depositor bank in the first quarter.Sales and marketing expense was $0.2 million in the first quarter or 3.1% of revenue, flat with the fourth quarter of 2009. We are pleased to see these categories trending to lower levels as a result of our hiring freeze and salary cuts imposed on non-engineering functions. Operating loss was $3.3 million for the first quarter of 2010 compared to operating loss of $3.7 million for fourth quarter 2009. This is related to the sequential improvement in profitability and our continued cost management in the first quarter. Net income of $31,000 was recorded in the first quarter of 2010 as a result of a foreign exchange gain on Renminbi and Taiwanese Dollars versus U.S. dollars. This compares to other income of $29,000 for the first quarter 2009 also related to foreign exchange gains. Read the rest of this transcript for free on seekingalpha.com