Symmetricom, Inc. (SYMM) F4Q10 (Qtr End 06/27/10) Earnings Call Transcript August 10, 2010 4:30 pm ET Executives Dan Madden – VP, Finance & IR Dave Côté – President and CEO Justin Spencer – CFO Analysts Victor Chiu – Morgan Keegan Mark Sue – RBC Capital Markets Mike Crawford – B. Riley & Company Chris Blackman – Empirical Capital Presentation Operator
I will now turn the call over to Dave.Dave Côté Thank you, Dan, and good afternoon, everyone. In today's call, I will begin with a review of the fourth quarter results followed by a summary of our performance by business. Justin will then provide details on our financials and guidance, and I'll wrap up with a review of the year and a few concluding remarks before we take questions. Let's get started with the fourth quarter results. Total revenue was $55.7 million. Revenue from our Communications Business was $33 million. Our Government Business reported $22.7 million. Strong gross margins and lower operating expenses drove a 33% year-over-year increase in non-GAAP earnings to $0.12 per share. And we strengthened our balance sheet by completing the repurchase of our convertible notes, ending the year with no debt. We are very pleased with a number of developments in the quarter. In our Communications Business, we saw continuing traction with our new PTP PackeTime products. Our products now provide the Sync infrastructure in more than 20 next generation deployments worldwide. And in the quarter, we received a sizable purchase order for our PackeTime products from a large North American carrier. We also made excellent progress with our embedded solutions, signing multiple license agreements related to the support and sale of our new line of embedded software synchronization technology. In our Government Business, system sales showed continued strength and we bolstered our leadership position in the important GPS space with additional funding on the GPS Block III program and the achievement of a key milestone on GPS Block IIF. With that overview, let me discuss our two businesses in more detail, starting with our Communications Business. I’ve had a year to look at this business and I know it can be somewhat difficult for investors to fully understand. So let me take this opportunity to provide a framework for how we think about it.
At its core, we see the business as having two main drivers. Number one is the development of IP-based next generation networks and wireless technologies. And number two is the modernization and expansion of existing wireline infrastructures, including SONET/SDH and cable infrastructures such as DOCSIS 3.0.First, with respect to next generation networks, an increasing portion of our Communications Business is directly linked to carrier deployments of next generation networks and 3G and 4G wireless technologies. This category of revenue includes the sync systems deployed and support of carrier Ethernet and Ethernet backhaul, notably PackeTime grandmasters, blades and chassis. It also includes GPS and PackeTime-based embedded solutions that support new wireless technologies, including WiMAX and LTE. In total, we estimate that roughly 20% of our communications product revenue is currently next generation oriented, and we expect this category to grow at an annual rate of 20% to 25%. In the fourth quarter, we saw several notable successes in the next generation network part of our business, including continuing traction on our new PackeTime products. Many wireline and wireless carriers worldwide are in the process of migrating to Ethernet backhaul. And as I just mentioned, there are now more than 20 commercial deployments underway worldwide that are using our PackeTime products. In the fourth quarter alone, Nokia-Siemens supported five new PTP deployments with our PackeTime gear. Internationally, major carriers in Brazil and Japan also became new PackeTime customers. In addition, in the fourth quarter, a large North American carrier made a sizable purchase of PackeTime for its network. We are encouraged by the level of market activity for PTP as a primary method for distributing time across packet networks. In the quarter, we continued to expand our ecosystem of partnerships with network equipment manufacturers and others that support the sale and deployment of our PackeTime technology. Since our recent launch of a line of embedded PTP sync software solutions, we started working with network equipment manufacturers, silicon vendors, and other partners that will allow mobile backhaul equipment and bay station manufacturers to incorporate our PackeTime software client to their equipment. Earlier in the quarter, we announced our first such offering. The new SCi 2000 reference design board utilizing Freescale Semiconductor’s processor technology. Read the rest of this transcript for free on seekingalpha.com