Trident Microsystems, Inc. ( TRID)

Q4 2010 Earnings Conference Call

February 3, 2011 5:00 PM ET

Executives

John Swenson – IR

Pete Mangan – EVP and CFO

Philippe Geyres – Interim CEO

Analysts

Eva [ph] – Auriga USA LLC

Brian Gleason – Private Investor

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Q4 2010 Trident Microsystems Earnings Conference Call. My name is Laura and I’ll be your coordinator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I will now turn the presentation over to your host for today, John Swenson of Trident. Please proceed, sir.

John Swenson

Thank you, Laura. Good afternoon and welcome to Trident Microsystems Conference Call for the fourth quarter ending December 31, 2010. After the market closed today, Trident issued a press release discussing results for the quarter. The press release is accessible online at www.tridentmicro.com. This call is being broadcast live over the web and is accessible using the link found in today’s earning’s press release. A replay of the webcast will be available starting tomorrow by accessing the Investor Relations section of Trident’s website.

Before we begin, please note that during this call, we will make forward-looking statements. This includes comments related to guidance on anticipated revenues and operating losses, the pace of restructuring and integration activity, future product shipments and other statements. We are not obligated to update these statements.

Actual results may differ materially from the forward-looking statements made today and have in fact done so in the past. These projections are forward-looking statements are subject to certain risk and uncertainties. These risks include, in particular, our ability to realize the benefits from our acquisition of product lines and IP from NXP, our ability to reduce expenses, the timing of new product introductions, the ability to obtain design wins among major OEMs for Trident’s products, the availability of wafers from our suppliers, and competitive pressures, including pricing and competitors’ new product introductions, the impact of the uncertain global macroeconomic environment, the increasingly competitive TV and Set-top Box semiconductor markets and our ability to retain key employees globally.

These and other factors are discussed in our press releases and in the company’s filing with the SEC. We encourage you to read these documents that to come to your own conclusions about the risks and uncertainties inherent in Trident’s business.

Also please note that we will present non-GAAP financial information in this call. But reconciliation of our non-GAAP information to the most comparable information under GAAP, please refer to our earnings press release.

On today’s call are Philippe Geyres, Trident’s recently appointed Interim CEO, speaking to you from Europe; and Pete Mangan, Trident’s Executive VP and CFO. He will review the financial results for the quarter and Philippe will follow with further discussion of Trident’s business. Finally, Pete will provide guidance for the first quarter of 2011, and will then open the call for questions.

Now, I’ll turn the call over to Pete Mangan.

Pete Mangan

Thank you, John. Welcome, everyone, and thank you for joining the call today. Although the fourth quarter non-GAAP results were generally in line with the revised guidance we issued on January 4 th, we are disappointed to again report an operating loss after achieving non-GAAP breakeven in Q3. The company is committed to returning to EBITDA positive levels quickly.

In our prepared comments today, Philippe and I will share some additional thoughts on achieving this objective. That said for the fourth quarter 2010, net revenues came in at $118.6 million, down 33% from the seasonally strong Q3 of a $176.6 million. TV products declined 41% sequentially to $76 million compared to $129.5 million in Q3. The declines were evenly spread across both SoCs and discrete products, particularly our SoCs and FRCs serving mid-range to high end TVs.

As we have said, a normal seasonal decline in TV would be in the range of 15% to 20%. The Q4 decline was more significant as a result of two factors. First, we believe the supply constraints for Trident in the industry generally lead to an over ordering in Q2 and Q3 as our customers had high expectations for 3D and mid-range TVs. When this demand did not materialize, our FRC and SoC business turned down dramatically in Q4. Second, as we have said before, we have lost share with our largest customer as a result of supply constraints earlier in 2010. Please note these factors will also impact our Q1 revenue outlook.

Set-top Box revenues in the quarter were $42.6 million, down 10% from Q3. As expected, revenues were up in our satellite segment, a result of strength in the quarter for DIRECTV H24 program. This is more than offset by continuing weakness in our retail segment, which is working through a transition from legacy standard definition products to our newer high definition products as well as an slower than expected customer ramp of new cable programs.

In summary by category, TV discrete products represented 38% of sales followed by Set-top Box at 36%, and TV SoCs at 26%. Sales by customer for the quarter reflected the relative weakness in TV, which was also drove lower customer concentration. Samsung still number one with 12% of total revenues was down from 19% in Q3. Fermax moved in the number two spot with 11% of revenues and Philips moved into number three at 9%, down from 14% in Q3.

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