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» CSR's CEO Discusses Q4 2011 Results (US) - Earnings Call Transcript
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For Q4 2011, our revenues came in at $244 million towards the top end of our guidance. We saw year-over-year revenue growth in automotive of 15% and in home of 32% but declines in personal navigation devices, or PNDs, of 56% and in handsets of 11%.In the fourth quarter, our underlying gross margins continue to improve to 51% up from 48.7% in Q4 2010 as we get an increase proportion of our revenue from higher margin platforms. We have confidence in our future prospects and as a reflection of that confidence, the Board is recommending a final dividend of $0.071 resulting in an annual dividend for 2011 of $0.103 per share with an increase of 5% on 2010. In addition, we are announcing up to a $50 million share buyback. As you know, we have platforms in Voice & Music, Automotive Infotainment, Digital Still Cameras and Imaging. And we’re pleased with the momentum we have in those markets. Now, before I talk about the performance of our business groups, let me update you on the Zoran integration and our cost reduction program. We have largely completed the integration with Zoran and we have made good progress delivering towards the $130 million in cost savings as a result of both integration and organization to no longer invest in the development of DTV SOCs, set-top box SOCs and digital tuners. Our head count which stood at 3,185 at the end of Q3 was down to 2,783 by December 31. We expect to be around 2,400 by the end of Q2 2011. If you look at our underlying Q4 OpEx run rate, we are well on our way delivering the $130 million in cost reduction by the end of Q2 2012. And as we implement our cost reduction plan, we will continue to look for opportunities to increase our efficiency and thereby accelerate our progress towards delivering our targeted levels of R&D and SG&A expense as a percentage of revenue.
Next, I will review the performance of our four business groups starting with Auto. The Auto group consists of two main parts; Automotive Infotainment and PNDs. The group’s $45.4 million revenue includes $2.3 million from Zoran.In Q4 strong growth in Automotive Infotainment of 15% was more than offset by a decline in PNDs of 56% as navigation and location capabilities are moving towards index navigation and smartphones. We also faced increasing competition in the PND segment. For the year, this has resulted in an 8% revenue decline for Auto from $233.1 million in 2010 to $205 million in 2011. Looking ahead, we do expect continued growth in the Automotive Infotainment market, and ongoing decline to PND market. And we are managing our investments accordingly. We do see good design win traction in Automotive Infotainment both in SOCs and in connectivity. Moving on to the Home business group. The Home business group consists of voice and music, consumer electronics, and imaging. DTVs, set-top box and digital tuners are reported separately under their legacy products group. The group’s at $72.9 million Q4 revenue includes $15.1 million from Zoran. Excluding Zoran, Home grew with 5% from Q4 2010. Growth came from voice and music and gaming where we added a major customer. For the year, our revenues in Home of $269 million are 14% higher than in 2010, driven by $20 million in additional revenue from Zoran, the growth in stereo, audio and the gaming win. On the platform side, we launched our Bluetooth Smart platform with the micro energy development kit. Our design wins were strong with the number of stereo Bluetooth SIG qualifications with CSR voice & usic silicon inside at 310 up from 134 in 2010. This represents a market share of more than 90% for both years. Read the rest of this transcript for free on seekingalpha.com