Symmetricom, Inc ( SYMM)

F1Q11 (Qtr End 09/26/09) Earnings Call

October 26, 2010 4:30 pm ET


Dan Madden - VP of Finance and IR

Dave Côté - President and CEO

Justin Spencer - CFO


Joseph Longobardi - RBC Capital Markets

Mike Crawford - B. Riley & Company

Simon Leopold – Morgan Keegan


Good afternoon and thank you for standing by. All participants will be in a listen-only mode until the question and answer session of the conference. This conference is being recorded at the request of Symmetricom. If you have any objections, you may disconnect at this time. I would now like to introduce the host for today's conference, Mr. Dan Madden, Vice President of Finance and Investor Relations. Mr. Madden, you may begin.

Dan Madden

Good afternoon. Welcome and thank you for attending Symmetricom's Fiscal 2011 first quarter conference call. With me today are Dave Côté, Chief Executive Officer and Justin Spencer, Chief Financial Officer. If you have not received today's news release, you may download it from our website.

I would like to remind everyone that statements made during the course of this call concerning Symmetricom's business outlook, the market acceptance of new products, the competitive environment, and financial performance expectations are forward-looking statements that involve a number of risks and uncertainties.

Actual results could differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements are contained in the company's Form 10-K for the year ended June 27, 2010 and subsequent filings with the SEC, as well as in today's news release. 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 first 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 few concluding remarks before we take questions.

Let's get started with the first-quarter results. We are pleased with our performance in the quarter. Total revenue was $54.4 million, up about 4% from last year with increases in both of our businesses. We had record first quarter on non-GAAP earnings of $0.13 per share up from $0.06 a year ago driven by strong gross margins from a favorable product mix.

We are also pleased with the progress made on our next generation products, our new PTP PackeTime products continue to ramp, worldwide nine new next generation deployments using our PackeTime equipments were rolled out in the quarter. We received a sizable PackeTime order from a continuing deployment by our South African carrier and new order from a major carrier in Japan.

We also expanded our PTP portfolio in to the power market and recently demonstrated interoperability running our PTP profile designed specifically for power. We are excited about the opportunity that timing technology made play in the smart grid infrastructure and I will provide more detail on this later in the call.

We continued to make progress with our line of embedded solutions adding a new design partnership for our embedded software synchronization technology with a large semiconductor manufacturer.

And finally we received several new funding awards to further the development of next generation atomic clock technologies.

With that overview, let me turn to the performance of our two businesses. Starting with our communications business unit, revenue was $33 million an increase from $32.4 million a year ago on strong sales of our next generation products. Last quarter I outlined a framework that I hoped would help investors better understand how we think about this business.

As quick recap, this business has two main drivers. First, the deployment of next generation network architectures and wireless technologies. These networks are driving an increasing portion of our communications business. We estimate that roughly 20% of last year’s communications product revenue was next generation oriented and expect this category to grow 20% to 25% this year.

Based on our first quarter results with notable strength in our PTP business we are well on our way to achieving that level for growth this year. The second driver is the modernization and expansion of existing wireline infrastructures, which continues at a relatively stable pace.

Now on to more detail for these two areas. In the next generation part of communications business, we saw the continuing market acceptance of our new PackeTime products, as I mentioned nine new deployments of Ethernet networks using our sync infrastructure equipment were rolled out in the quarter. Bringing the total to 37 world wide.

In the first quarter we received at $3 million order for next generation deployment from Vodacom, which is Vodaphones South African subsidiary. We also had a $500,000 order from Softbank in Japan for packetbase synchronization as they move to carrier Ethernet.

We continue to build partnerships with network equipment manufacturers and others that support the sale and deployment of our PackeTime technology. As a result of our recent launch of a line of embedded PTP sync software solutions, we partnering with network equipment manufacturers, silicon vendors and others that will allow mobile backhaul equipment and base station manufacturers to incorporate our PackeTime software client in to their equipment.

Our latest edition to this list of partners includes a major semiconductor manufacturer that will incorporate our 1588 soft clock into its processor for network switches. At a recent Carrier Ethernet World Congress in Warsaw, Poland, Symmetricom was the gold standard by performance and interoperability of numerous NEM client machine was compared.

Read the rest of this transcript for free on