Also, the company will be presenting at the Kaufman Brothers conference in New York City on Thursday, September 8, at 11:30 in the morning.Now for our Safe Harbor statement. During the course of this conference call, we may make projections or other forward-looking statements regarding LTX-Credence’s business outlook or the future financial performance of the company. We wish to caution you that these statements, such as projected revenues, net income or loss, earnings or loss per share, operating expenses, gross margin, cash flow, non-GAAP measures, and breakeven targets are only predictions and that actual events or results may differ materially. The guidance provided during this call represents the company’s estimates as of this day and the company assumes no obligation to update this guidance. Please refer to our Safe Harbor statement in our earnings release for more information on important factors that could cause actual results to differ. Now, on to the call. Dave? David Tacelli Thank you Mark, and good morning everyone. On today’s call, in addition to providing some detail on our fourth quarter and fiscal year performance, I’ll also review two of the market segments we’re focused on, microcontrols and handsets. Before I talk about the financial performance of the company and the two individual market segments, I’d like to provide some commentary on the current business environment. Our industry as a whole has clearly hit a soft patch in the current business cycle. As our guidance for the first quarter indicates, there is a slowdown among our customers, both IDMs and OSATs, driving them to scale back capital purchases. This is not an unusual event for our industry, as all ATE suppliers rely on unit volume expansion as the key driver for business growth. When our customers’ growth either stagnates or declines, it has a dramatic impact on our industry.
That is why at LTX-Credence, we have built a flexible business model. Our goal is to make our cost structure as variable as possible so that when an industry slowdown does occur, we can maintain our aggressive approach at developing new products and gaining additional market share.Once the integration of LTX and Credence was completed, the model has been proven to generate strong profits and cash. Since our first quarter of fiscal year 2010, the company has generated over $120 million of EBITDA. As we have always maintained, visibility for our business is limited to the very near term, so forecasting the direction of the business beyond this window is extremely difficult. An encouraging sign for us is that utilization of our equipment at a large number of significant accounts remains relatively high at more than 80%, which means that any upside in demand would translate into immediate orders to us. Of course, if that were to occur, our outsource manufacturing model puts us in a strong position to react quickly. Industry conditions aside, we remain keenly focused on winning new customers. We expect these new wins to translate into market share gains and revenue growth for LTX-Credence. Over the last several quarters, we have made solid progress at transitioning some of these new accounts from the development stage into volume production. The number of new opportunities remains high and I see additional wins in volume purchases from these customers driving our top line growth. So how did we do in the fourth quarter? Product revenues were 7% higher than they were in Q3, driven by strong growth in our application-specific and power management market segments. Product sales for application-specific devices grew more than 70% quarter-over-quarter. Our RF power amplifier business was flat compared to Q3, but the mix of systems heavily transitioned to our PAx tester, which has now become our primary revenue generator in that market segment.
Business related to handsets showed the most weakness, declining by 60% quarter-over-quarter. We expect this segment to begin building positive momentum as smart phone suppliers introduce new phones for the holiday season.Read the rest of this transcript for free on seekingalpha.com