Spansion Inc. (SPSN)

Q2 2010 Earnings Call.

July 21, 2010 04:30 pm ET

Executives

John Kispert – Chief Executive Officer.

Shubham Maheshwari - Investor Relations

Randy Furr - Executive Vice President and Chief Financial Officer

Analysts

[Jen] – Unknown Company

Atif Malik - Morgan Stanley

Joseph Stauff - Susquehanna

Daniel Barenbaum - Auriga USA

John Evans - Edmunds White Partners

Presentation

Operator

Good day ladies and gentlemen and welcome to the Spansion Inc second quarter 2010 earnings conference call (operator instructions) and as a reminder, this conference is being recorded. And now your host for today’s conference, Shubham Maheshwari. Please begin.

Shubham Maheshwari - Investor Relations

Thank you and welcome to Spansion second quarter 2010 earnings conference call. On the call with m today are John Kispert, CEO and Randy Furr, CFO of Spansion. We will be referencing a slider during the portion of today’s call. You can download a copy of these slides from our investor relations section of website at www.spansion.com 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 1-8-00-642-1687 and the conference ID is 87909802. This replay will run through July 24 th. 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 wish to caution you that such statements are predictions and that actual events or results may differ materially. For this, that the company considers to be important factors that could cause actual results to differ materially from those set forward in the forward looking statements. We urge you to carefully review risks and uncertainties described in our SEC filings including but not limited to Spansion’s quarterly report on Form 10Q for the fiscal quarter ended March 28 th, 2010 and annual report on Form 10Q 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 – Chief Executive Officer.

Thank you Shubham. Good afternoon and welcome to our Q2 earnings conference call. This is the first time we’ve been able to share results with you since emerging from our reorganization process. Throughout the process we have maintained a laser focus on our customers and the specific needs of their markets which include automotive, computing and communications, gaming and mobility.

I believe that with this focus it’s been a significant contributor for us getting through the reorganization and will provide increasing benefits now that we have emerged. On today’s call I will discuss our progress and update you on the market and also highlight our product focus and strategy. Then Randy will give you the financial details and Q3 outlook and then we’ll have time to field your questions.

To start at high level, we delivered strong results this quarter with the third consecutive quarter or revenuer growth in our core embedded markets. This was across all of our embedded segments and we were also able to increase our gross margins and improve our operating profit and cash flow. Of course fresh start accounting makes this harder to understand on a GAAP basis so shortly randy will cover the fresh start accounting impacts to our income statement and balance sheet as a result of our merging and restructuring in May.

You will see on slide four our revenue breakdown. We saw growth in all of our embedded market segments with the two largest being consumer and gaming and automotive and industrial. We also saw a solid growth in our three largest regions which are Asia Pacific, Japan and Europe. You can also see breakdowns in technology and density as well in the presentation.

In May we were able to reengage with all of our customers throughout all of our segments and regions. With new customer designs went to roughly doubling over the last couple of months. We are focused on and poised to win market share. By providing our customers with superior service, technology and quality, we have identified areas where technology advancements could give customers a market advantage. For example the gaming segment requires high density NOR with fast programming speeds.

Our MirrorBit technology is well suited for this application and we are developing products that will lead to increased revenue in this segment. We’ll also be applying these feature set and capabilities to all our applications in other markets. In automotive and some industrial segments, the need for flash memory is growing in telematics and in next generation dashboards. Expansion products are enabling bi-directional communication for vehicle tracking and recovering, [concierge] services and remote diagnostics.

We’re also working with chipset vendors and automotive customers to bring more value to next generation dashboards and enable instant on. For example in infotainment applications, radio applications and also the monitoring of screens. On the product execution front we continue to make steady progress toward our previously stated goal of introducing eight new products over the next 8 moths. In June we introduced a 256 megabyte multi IO SPI device which is the highest density SPI product in the market with applications primarily in communications and consumer.

We’ll keep you updated on our new product development progress going forward. The September ending quarter is a very key quarter for us in regards to product introductions and we’ve made great strides internally in getting these new technologies and products to markets. We look forward to talking more about it. Our MirrorBit charged trapping technology is the foundation for developing the NOR and end products our customers require.

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