Q3 2011 Earnings Call

October 26, 2011 8:30 a.m. ET


Thomas Shields – COO and CFO

Ronald Michels – CEO


Quinn Bolton – Needham & Co. LLC

Edward Snyder – Charter Equity Research

Dale Pfau – Cantor Fitzgerald Securities

Anthony Staff – Craig Hallum

Todd Koffman – Raymond James & Associates

Aalok Shah – D. A. Davidson & Co

Harsh Kumar – Morgan Keegan & Co., Inc.



Good morning. My name is Nashanta, and I will be your conference operator today. At this time, I would like to welcome everyone to the ANADIGICS Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Tom Shields, you may begin.

Thomas Shields

Thank you, operator. Good morning, everyone, and welcome to the ANADIGICS’ third quarter 2011 earnings conference call.

Before we get started, please remember, any comments made in this call by management, as part of prepared remarks or in response to your questions, may contain forward-looking information. Such information is subject to risks and uncertainties as described in this morning’s press release and in the company’s various filings with the SEC.

I would now like to turn the call over to Ron Michels, for his opening remarks.

Ronald Michels

Thank you, Tom. Good morning, everyone and thank you for joining us. I’m very pleased to report that our third quarter revenue was up 5% sequentially, which is led by a 9% increase in our wireless product line. This improvement was directly attributable to further quarterly increases in market share with a number of our key wireless customers, which offset the previously expected quarterly declines with RIM. Broadband declined 6% sequentially primarily due to lower demand in WiMAX.

Let me begin today by talking about the progress we’ve made with our customers. Our renewed commitment to reinforcing customer relationships is beginning to gain momentum. We’ve doubled our market share with Samsung year-over-year, and are in a number of new Smartphones such as the Galaxy S2, the WAVE 3, the Galaxy Tab 4G, and the Galaxy Note.

At ZTE, we are a leading provider for their Smartphones and have a key design win in the higher volume ZTE Blade. At LG, we’re shipping in to the COSMOS-2 and the Revere. And continue to ship into the Revolution.

Turning to our progress on our reference design partnerships as I’ve discussed in the past, we’re targeting increased business opportunities across platforms using Qualcomm reference designs. And last quarter we specifically mentioned being in a reference design for the LTE Fusion family and Gobi 3K. Now, we’re pleased to report that we also have two parts in a data card reference design for the Viking family, which is our ALT6701, which is a HELP PA optimized for LTE. And our AWT6631 HELP3, which is our first win, which is optimized per average power tracking.

We’ve had great success with new product development over the last six months, and have delivered early hardware and data for consideration on Next Generation designs. In conjunction with these efforts, we are also supporting key OEMs with the same early hardware and data. The goal is to see the value chain, both reference design partners and OEMs with our latest technology in advanced reference refreshes, which are anticipated for the first half of 2012.

Overall, we continue to be impressed with the milestones that our dedicated reference design team has achieved. And we remain confidence that will prove to be critical; a critical strategic advantage for ANADIGICS going forward.

Let me give you a quick update on our ILD Triple-Layer metal process. As a reminder, this process provides three benefits, lower product cost, smaller product footprint, and increased factory capacity. We are now sampling new wireless products based on this technology, and anticipate mass production of these products to be in the second half of 2012.

Let’s talk about how we’re going to expand our market share into pads and MMPAs. We estimate that our served available market for wireless in 2011 to be 830 million. This increases to 1.8 billion in 2012, and 2.3 billion in 2013. And that’s with the entry of the pads and the MMPAs.

Now let’s get into greater detail about our new products that will key – and the key contributors that will fuel our growth for 2012. Last quarter I mentioned a new product family that our engineers were really excited about, which is about the Dual-Band PAs that we’re working on.

This Dual-Band family is referenced-to-design driven, and leverages our new proprietary 2-state design architectures and small form factor that reduce board space by 20%. Our product will feature the world’s smallest Dual-Band PA footprint, with the lowest DGO9 average current. We’ve already begun to sample this and see – begun to see strong customer interest in this, and will be sampling very shortly.

During the PADs, which is our Power Amplifier and Duplexer in one package, I mentioned last quarter that our PAD progress was ahead of schedule and that we’re seeing a high level of interest from both current and potentially new Tier 1 customers. We sampled prototypes in August. A and have increased sample quantities in support of early builds to key OEM target customers.

There’s a number of key differentiators in our PADs versus the competition. First is smaller RF footprint, providing a 50% board savings versus less integrated solutions. And the second is performance improvement. And that’s why optimizing the TA Duplexer Match, which enables faster design, implementation, and time to market. Our plan is to be in production in the first half of 2012.

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