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And now, I’d like to turn the call over to Patricia Chou. Patricia.Patricia Chou Thank you for participating in Actions’ earnings conference call. We appreciate your continued interest in Actions. I will provide a business update and discuss financial results for the second quarter of 2011. As well as expectations for future performance. Niccolo will be available during the Q& A portion of the call where I will translate from Mandarin to English on his behalf. First, I would like to comment on the press release issued today announcing the CFO transition. Effective August 31 st, I will be stepping down and Nigel Liu will be promoted to the job of CFO. Nigel has been with Actions since 2007 in several finance-related functions. The Board of Directors and the management team are confident that his experience will provide a seamless transition for the position. I have enjoyed my nearly five-year tenure with the company. And I continue to be optimistic about Actions long-term growth prospects. I will remain an adviser to the company following my departure. Now, moving on to our financial results for the second quarter. As a reminder, our financials are reported in accordance with U.S. GAAP. For the second quarter that ended June 30 th, 2011, we reported a revenue of $10.5 million compared to $9.4 million in the first quarter of 2011. Our gross margin for the second quarter was 37.9% compared to 39.1% for the prior quarter. This slight decline in gross margin was mainly due to the higher volume of lower margin products sold. For the second quarter, total stock-based compensation was $27 million compared to an expense in the first quarter of $0.6 million. R&D expense was $5.6 million or 53.4% of revenue for the second quarter compared to $5.1 million in the first quarter. We anticipate our R&D expense to continue to represent a high percentage of revenue as we increase R&D talent to focus on our diversified product development initiatives. In addition, we are focusing more than half of our R&D resources in high-end new product development.
G&A expense was $2.2 million in the second quarter or 21.2% of revenue compared to $1.7 million in the first quarter.In the first quarter, G&A expense was lower due to the annual [inaudible] expense reimbursement from our AES depository bank. Note the marketing expense was $0.3 million in the second quarter or 3.1% of revenue compared to $0.3 million in the first quarter. We continue to tightly manage expense levels in this category and maintain a hiring freeze for non-engineering functions. And it’s not because of the management and executive level. Operating loss was $3.8 million for the second quarter compared to a loss of $3.1 million for the prior quarter. As noted last quarter, as the result of the continued depreciation of the Chinese yen against the U.S. dollar, non-recurring engineering charges in developing new high-end products, and a comparative compensation in China’s talent markets, we expect our operating expenses denominated in Chinese yen to increase gradually. Net other income for the second quarter was $1.3 million as a net result of foreign exchange gain of $1.1 million and a total yen of one of [inaudible] invested companies of $0.2 million. Other income of $1.1 million for the first quarter was over related to a net foreign exchange gain. Read the rest of this transcript for free on seekingalpha.com