Actions Semiconductor's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Actions Semiconductor Co., Ltd. ( ACTS)

Q3 2011 Earnings Call

November 8, 2011 5:30 p.m. ET

Executives

Ellen Davis – Blueshirt Group

Nigel Liu – CFO

Niccolo Chen – CEO

Analysts

Rick Fearon – Accretive Capital Partners

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by.

Welcome to the Actions Semiconductor Third Quarter 2011 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by the 1 on your touchtone phone. Please star 0 for operator assistance at any time. For participants using speaker equipment, it will be necessary to pick up your handset before making your selection.

This conference is being recorded today, Tuesday, November 8, 2011.

And I would now like to turn the conference over to Ellen Davis with the Blueshirt Group. Please go ahead.

Ellen Davis

Good afternoon, and thank you for joining us on today's conference call to discuss Actions Semiconductor's third quarter 2011 financial results. This call is being broadcast live over the web and can be accessed on the Investor Relations section of Action's website at www.actions-semi.com for 90 days.

On today's call are Niccolo Chen, Chief Executive Officer; Nigel Liu, Chief Financial Officer; Dr. Zhenyu Zhou, Senior Vice President; and Chung Hsu, Director of Business Development and Investor Relations.

After the market closed in the US today, Actions issued a press release discussing the results for its third quarter ended September 30, 2011. The press release was also filed on Form 6-K with the US Securities and Exchange Commission. The press release is accessible online at the company's website as well as the SEC's website, or you can call the Blueshirt Group at area code 415-217-7722, and we will email you a copy.

We would like to remind you that during the course of this conference call, Action's management team may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are simply estimates and actual events or results may differ materially. We refer you to the documents that Actions files from time to time with the SEC, specifically the company's most recently filed Forms F-1, 20F and 6-K. These documents identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

And now I'd like to turn the call over to Nigel Liu. Nigel?

N igel L iu

Yes. Thank you.

Thank you for participating in Actions on this conference call. We appreciate your continued interest in Actions. I will provide a brief update and discuss financial results for the third quarter of 2011, as well the expectation for future performance. Later, Hsuan-Wen will be available during the Q&A portion of the call.

First, I will comment on the press release issued today announcing the CEO transition. Effective November 13, 2011, Niccolo Chen will be stepping down as CEO of Actions Semiconductor. Dr. David Zhou will be promoted to the role of CEO effective December 1, 2011. Since 2010, David has been Senior Vice President at Actions Semiconductor, and prior to that, he served as CEO of Mavrix Technology, which he founded in 2005. Mavrix was acquired by Actions in 2010 and is now a subsidiary of Actions Semiconductor.

A native of China, David attended (inaudible) in the United States and received his PhD from the University of Southern California. He has over 15 years of senior management experience both in the US and China. The board of directors and the management team are (inaudible) his experience and strong understanding of our business will ensure a smooth transition.

Niccolo will assume the role of Chief Strategy Officer where he will focus on the company strategy investment. The board of directors and the management team (inaudible) Niccolo for his strong contribution to Actions Semiconductor over the past two years, particularly in building out our product portfolio. We look forward to his continued participation in the growth of the company.

Now, moving on to our financial results for the third quarter, just a reminder, our operations are reported in accordance with US GAAP.

For the third quarter ending September 30, 2011, we recorded revenue of $15.3 million compared to $10.5 million in the second quarter of 2011. Our gross margin for the third quarter was 14.6% compared to 37.9% for the prior quarter. For the third quarter, total stock-based compensation expense was (inaudible) from the original 10% and [15%], compared to expense in the second quarter of $0.7 million.

R&D sales was $5.5 million or 35.5% of revenue for the third quarter compared to $4.6 million in the second quarter. We anticipate our R&D expense to continue to represent a high percentage of the revenue. We increased R&D talent to focus on our diversified product development initiatives. In addition, we are focusing more than half our R&D resource in high-end new product development.

G&A expense was $2.4 million in the third quarter, or 13.6% of revenue, compared to $2.2 million in the second quarter. Sales and marketing expense was $0.3 million in the third quarter, or 1.9% of revenue, compared to $0.3 million in the second quarter. We continue to tightly manage expense level in this category and maintain a high (inaudible) in the executive and management level.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

The Stock Market Has Every Reason to See a Fresh Rally

The Stock Market Has Every Reason to See a Fresh Rally

3 Simple Tips on Investing From TheStreet's Jim Cramer

3 Simple Tips on Investing From TheStreet's Jim Cramer

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly