PMC-Sierra (PMCS) Q2 2012 Earnings Call July 30, 2012 4:30 pm ET Executives Jennifer Gianola Gregory S. Lang - Chief Executive Officer, President and Director Michael W. Zellner - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance Analysts James Schneider - Goldman Sachs Group Inc., Research Division Harlan Sur - JP Morgan Chase & Co, Research Division Ruben Roy - Mizuho Securities USA Inc., Research Division Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division Srini Pajjuri - CLSA Asia-Pacific Markets, Research Division Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division David Wu Sundeep Bajikar - Jefferies & Company, Inc., Research Division William S. Harrison - Signal Hill Capital Group LLC, Research Division Presentation Operator
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Note that PMC undertakes no obligation to update any forward-looking statements. Please note that for each of the historical non-GAAP financial measures mentioned on this call, a full reconciliation to the most comparable GAAP financial measures is included on our press release issued today. In addition, a GAAP to non-GAAP reconciliation of financial measures noted in our outlook will be posted to our website under the Financial Reports section of the Investor Relations tab. [Operator Instructions].Thank you, and I will now turn the call over to Greg Lang. Gregory S. Lang Thank you for joining us today, and welcome to our second quarter earnings call. I'm pleased to report that the second quarter revenues were up 4% sequentially in line with our expectations. Specifically, reported net revenues of $138 million and $0.09 non-GAAP EPS. We also introduced several major new products that have been well received by our customers on a global basis. While we're pleased to see growth, we're seeing the macro environment challenge the pace of recovery in every geography and product area. In my discussions with our end customer, it's clear that the economic challenges have caused concern and uncertainty in their outlook. With the current environment at hand, we're very focused on project execution, operational efficiency and tightly managing our expenses. As you recall from our analyst day, our business focus is on transforming networks that connect, move and store big data. Network demands have grown far beyond people making and receiving cell calls and consumers everywhere now streaming full-length movies and videos and are watching live television on billions of devices around the globe. We are convinced that the fundamentals behind our key growth drivers remain intact. We're focus on delivering these transformative products, winning the sockets that matter and positioning ourselves for great leverage as the world economy recovers and our business continues to strengthen. With this backdrop, I'll now discuss the results for Q2.
While we're pleased with the sequential growth, the mix was a bit different than we expected. Storage came in weaker than our initial expectations while our Optical business performed better than expected. At the top level, the Storage Network segment was 62% of total revenue, down from 66% in Q1; optical revenue came in at 23% of the total, up from 20% last quarter; and Mobile revenues came in at 15% of the total, up from 14% last quarter. And for those of you tracking the legacy portion of our revenue, it was 9% of our total revenue in Q2.I'll start with the storage and market segments. Our storage business in Q2 was down about 2% versus last quarter due to a slower Romley ramp than expected. Going forward, we expect to see growth for the balance of the year. We continue to execute well in terms of design wins and delivering new products. We were the only RAID Controller vendor to ship a PCI Express Gen 3 chip with the new Romley generation of servers and continue to be the only PCI Express Gen 3 based RAID solution in the market. For reference, PCI Gen 3 runs at 8 gig versus 5 gig for Gen 2 and delivers roughly double the performance across this critical interface. Read the rest of this transcript for free on seekingalpha.com