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Entropic Communications Reports Third Quarter Results
(GlobeNewswire Via Acquire Media NewsEdge) SAN DIEGO, Oct. 26, 2009 (GLOBE NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon and software solutions to enable connected home entertainment, today reported its third quarter results for the period ended September 30, 2009. Entropic reported third quarter net revenues of $31.0 million, an increase of 19 percent compared with $26.1 million in the second quarter of 2009 and two percent lower than in the third quarter of 2008.
In accordance with U.S. generally accepted accounting principles (GAAP), the company's third quarter net loss was $1.2 million, or ($0.02) per share (basic and diluted). This compares with GAAP net loss of $4.3 million, or ($0.06) per share (basic and diluted) in the second quarter of 2009. Non-GAAP net income in the third quarter was $1.4 million, or $0.02 per share (basic and diluted), compared to non-GAAP net loss of $0.7 million, or ($0.01) per share (basic and diluted) in the second quarter of 2009.
"We were pleased to once again see strong quarter-over-quarter revenue growth and a return to non-GAAP profitability," said Patrick Henry, president and CEO of Entropic Communications. "Our MoCA home networking products are now shipping into new Pay-TV service provider deployments, demand for our satellite products is strong and we are gaining traction with our silicon tuner products. Entropic's customer base is diversifying and we are well positioned to achieve continued revenue and earnings growth. We are very excited about the opportunities in front of us and believe we have a solid product portfolio and roadmap that substantiate a compelling long-term growth strategy."
Three months ended
----------------------------
Sept 30, June 30, Sept 30,
(In millions, except per share data) 2009 2009 2008
Net revenues $31.0 $26.1 $31.7
GAAP net loss ($1.2) ($4.3) ($7.1)
GAAP net loss per share (basic and
diluted) ($0.02) ($0.06) ($0.11)
Non-GAAP net income (loss) (1) $1.4 ($0.7) ($1.2)
Non-GAAP net income (loss) per share (1) $0.02 ($0.01) ($0.02)
1. Please refer to "Non-GAAP Financial Measures" below and the
financial statements portion of this press release for an explanation
of the non-GAAP financial measures contained in the table above and a
reconciliation of such measures to the comparable GAAP financial
measures.
Recent Highlights
* Announced a collaborative relationship with Intellon Corporation to
accelerate the availability of home networking solutions combining
coaxial cable and powerline communications. Aligning the
capabilities of Entropic's MoCA and Intellon's HPAV solutions will
ensure continued compatibility with tens of millions of devices
already deployed by service providers and consumers throughout the
world and offer customers a solid pathway to the highly anticipated
MoCA 2.0 and HPAV2 standards.
* Partnered with Intel Digital Home Group to demonstrate the world's
first UPnP QoS 3.0 over MoCA on a set-top box platform during the
CableLabs Summer Conference in Denver. Entropic and Intel's shared
vision for ubiquitous connected home entertainment networking
showcased how MSOs can enable and deliver on the future convergence
of high-bandwidth, personal content applications without
compromising the delivery of premium service offerings.
* Demonstrated a MoCA enabled, high-performance, set-top box
reference design in collaboration with NXP Semiconductors for the
satellite, cable and IP STB markets at the International
Broadcasters Convention (IBC) 2009 in Amsterdam. NXP and Entropic
are enabling STB OEMs and service providers to bring complete home
networked STB solutions to market faster, with lower development
costs and ultra-low power consumption.
* Combined Entropic's proven MoCA solution with ViXS Systems'
advanced video processing technology to deliver a cutting-edge,
high-performance MoCA-enabled network attached storage (NAS)
reference design that enables premium content capture, storage and
sharing over a MoCA home network. The MoCA enabled NAS reference
design, which was demonstrated at IBC, will serve as a blueprint
for top-tier consumer electronic and service provider OEMs to
design a high-performance, feature-rich and cost-effective NAS for
a high-quality entertainment experience.
* Announced inclusion of Entropic's RF4400 ATSC Tuner in EchoStar's
high-definition over-the-air (OTA) module for select HD set-top
boxes. The RF4400 is an advanced silicon tuner that provides high
performance in a small form factor that will enhance the customer
viewing experience for over the air HD reception.
* Collaborated with Sigma Designs to develop high definition,
MoCA-compliant Cable TV and IPTV set-top box reference designs,
powered by Entropic's EN2510 and Sigma Designs' SMP8654. These
reference designs will bring highly competitive, full-featured STB
solutions to OEMs and service providers globally.
* Announced that Inverto's newest family of Black Unicable
Multiswitches will utilize Entropic's channel stacking switch
(CSS) silicon technology for the free to air market. Entropic's
CSS chips are the industry-leading and de facto standard for
single-cable solutions that fundamentally change and dramatically
simplify direct broadcast satellite (DBS) delivery to the home.
* Expanded Entropic's relationship with Cavium Networks and announced
support for the ECONA family of processors. Pairing Entropic's 65
nanometer, third-generation MoCA 1.1 compliant EN2510 single-chip
solution with Cavium's ECONA dual-core ARM-based processor family
will enable the development and fast delivery of best-in-class home
networking solutions ideally suited for fiber-to-the-home and IPTV
service provider deployments.
* Announced collaboration with PMC Sierra for the high-speed access
market. By combining PMC's high-speed 10G EPON and Entropic's
broadband access silicon solution, MSOs will have a cost effective
solution to extend the reach of fiber.
* Expanded the executive team with the addition of William R.
Bradford as senior vice president of worldwide sales. Mr. Bradford
has more than 20 years of direct sales, sales management,
marketing, business development and general management experience
in the semiconductor industry. Throughout his career, Mr. Bradford
has excelled at building sales organizations and developing
channels, alliances and OEM partnerships on a global basis.
* Recognized as the fastest growing technology company in San Diego
and the 5th fastest growing in North America by the Deloitte
Technology Fast 500, an annual list of the 500 fastest growing
technology, media, telecommunications, life sciences and clean
technology companies in the U.S. and Canada, based on percentage
fiscal year revenue growth over five years.
For More Information
Entropic management will be holding a conference call today, October 26, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company's results for the third quarter and to provide guidance for the fourth quarter. You may access the conference call via any of the following:
Teleconference: 719-325-2384
Conference ID: 9005064
Web Broadcast: http://ir.entropic.com/events.cfm
Replay: 719-457-0820
About Entropic Communications
Entropic Communications, Inc. (Nasdaq:ENTR) is a leading fabless semiconductor company that is engineering the future of connected home networking and entertainment by providing next-generation silicon and software technologies to the world's leading cable, telecommunications and satellite service providers, OEMs and consumer electronic manufacturers. As a co-founder of MoCA (Multimedia over Coax Alliance), Entropic pioneered and continues to evolve the way high-definition television-quality video and other multimedia & digital content such as movies, music, games and photos are brought into and delivered throughout the home. For more information, visit Entropic at www.entropic.com.
The Entropic Communications logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4255
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: net income (loss) and net income (loss) per share. These non-GAAP financial measures exclude the effects on the Statement of Operations of, among others, all forms of stock-based compensation, non-cash acquired intangibles amortization and impairment charges, and restructuring charges (benefits), and their related affects on the number of diluted shares used in calculating non-GAAP earnings (loss) per share.
Management uses these non-GAAP financial measures to manage the company's business, including setting operating budgets and executive compensation plans. These non-GAAP measures are also used to (i) supplement the financial results and forecasts reported to the company's board of directors, (ii) evaluate the company's operating performance, (iii) compare the company's performance to internal forecasts, and (iv) manage the company's business and benchmarking performance internally. The non-GAAP measures have been made available to stockholders consistently in the past to provide transparency on how management manages the company's operating performance. Management believes that these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP measures, in evaluating the company's ongoing operational performance.
The non-GAAP financial measures disclosed by the company should not be considered in isolation or a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Forward-Looking Statements
Statements in this press release that are not strictly historical in nature constitute "forward-looking statements." Such statements include, but are not limited to, statements regarding our expectations for future revenue and earnings growth, our belief that our product portfolio and roadmap substantiates a compelling long-term growth strategy, and the anticipated benefits from various businesses, collaborations and partnerships, and new executive hires that we have announced. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Entropic's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, our dependence on a limited number of customers for a substantial portion of our revenues; risks associated with adverse U.S. and international economic conditions; risks that the market for HD video and other multi-media content delivery and networking solutions will not develop as we expect; risks associated with competing against larger and more established companies and our ability to compete successfully in the market for MoCA-compliant chipsets; risks associated with timely development and introduction of new or enhanced products; risks that our collaborations and partnerships, and our new executive hires, will not yield their anticipated benefits; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
Entropic Communications(R) and the stylized Entropic "curve" logo are either trademarks or registered trademarks of Entropic Communications, Inc. in the United States and/or other countries.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Statements of Operations
(In thousands, except for share information and footnote disclosures)
Three Months Ended Nine Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2009 2009 2008 2009 2008
-------- -------- -------- --------- ---------
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Net revenues $30,958 $26,146 $31,678 $ 81,227 $116,502
Cost of net
revenues 15,332 13,201 17,308 40,437 64,014
-------- -------- -------- --------- ---------
Gross profit 15,626 12,945 14,370 40,790 52,488
Operating
expenses:
Research and
development 10,824 10,102 13,902 34,249 42,892
Sales and
marketing 3,345 3,395 3,991 10,377 12,590
General and
administrative 2,642 2,712 2,798 8,043 9,862
Write off of
in-process
research
and
development -- -- -- -- 1,300
Amortization
of purchased
intangibles -- -- 713 16 2,022
Restructuring
charges (1) 70 979 209 2,173 1,278
Impairment of
goodwill and
intangible
assets (2) -- -- -- 208 --
-------- -------- -------- --------- ---------
Total
operating
expenses 16,881 17,188 21,613 55,066 69,944
-------- -------- -------- --------- ---------
Loss from
operations (1,255) (4,243) (7,243) (14,276) (17,456)
Other income,
net 26 30 156 115 149
-------- -------- -------- --------- ---------
Loss before
income taxes (1,229) (4,213) (7,087) (14,161) (17,307)
-------- -------- -------- --------- ---------
Income tax
provision 9 74 37 100 119
-------- -------- -------- --------- ---------
Net loss
attributable
to common
stockholders $(1,238) $(4,287) $(7,124) $(14,261) $(17,426)
======== ======== ======== ========= =========
Net loss per
share
attributable
to common
stockholders
-- basic
and diluted $ (0.02) $ (0.06) $ (0.11) $ (0.21) $ (0.26)
======== ======== ======== ========= =========
Weighted average
number of
shares used
to compute
loss per
attributable
to common
stockholders 70,146 69,424 67,669 69,473 67,378
======== ======== ======== ========= =========
(1) During the three months ended September 30, 2009 and June 30,
2009, the Company recorded restructuring charges of $70,000 and
$979,000, respectively, related to a restructuring plan implemented
in March 2009 to improve its operating cost structure which included
a reduction-in-force and the closing of its France location and one
of its Israel locations. During the nine months ended September 30,
2009, the total restructuring charges related to the restructuring
plan were $2,173,000.
During the three months ended September 30, 2008, the Company
recorded restructuring charges of $209,000 related to the
implementation of a restructuring plan to improve its operating cost
structure which included a reduction-in-force.
During the six months ended June 30 2008, the Company recorded
restructuring charges of $1,069,000 related to exiting the lease
agreement for the Company's former headquarters in San Diego,
California, as well as related charges for the impairment of
property and equipment and other long term assets.
(2) During the three months ended March 31, 2009, the Company
recorded an impairment charge on intangible assets of $208,000.
The Company determined that the intangible assets associated with its
2007 acquisition of Arabella Software, Ltd. were fully impaired as
the developed technology acquired would no longer be used in the
ongoing business operations.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
Sept. 30, June 30, March 31, Dec. 31,
2009 2009 2009 2008
--------- --------- --------- ---------
(unaudited)(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 34,329 $ 31,403 $ 30,602 $ 30,071
Marketable securities -- 850 849 4,339
Accounts receivable, net 15,648 14,930 17,181 13,915
Inventory 14,067 13,462 14,979 18,693
Prepaid expenses and
other current assets 2,625 3,153 3,345 2,785
--------- --------- --------- ---------
Total current assets 66,669 63,798 66,956 69,803
Property and equipment,
net 11,757 12,154 12,802 13,046
Intangible assets, net 2,028 2,434 2,839 3,469
Other long-term assets 258 278 262 284
--------- --------- --------- ---------
Total assets $ 80,712 $ 78,664 $ 82,859 $ 86,602
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,882 $ 5,350 $ 6,818 $ 5,166
Accrued payroll and
benefits 3,373 3,088 3,559 3,498
Accrued expenses and
other current
liabilities 2,652 2,961 3,622 2,707
Deferred revenues 165 184 185 467
--------- --------- --------- ---------
Total current
liabilities 12,072 11,583 14,184 11,838
Stock repurchase
liability 431 512 677 784
Other long-term
liabilities 3,052 3,059 3,088 3,231
Stockholders' equity 65,157 63,510 64,910 70,749
--------- --------- --------- ---------
Total liabilities
and stockholders'
equity $ 80,712 $ 78,664 $ 82,859 $ 86,602
========= ========= ========= =========
ENTROPIC COMMUNICATIONS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except for share information and footnote disclosures)
This press release contains the following non-GAAP financial measures:
net income (loss) and net income (loss) per share. The presentation
of such measures is not intended to be considered in isolation or as
a substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. Our non-GAAP net income
(loss) and net income (loss) per share exclude the items listed below.
The following table sets forth such non-GAAP measures for the
applicable periods as well as the reconciliation of such measures to
the directly comparable GAAP measures for the periods shown.
Three Months Ended Nine Months Ended
---------------------------- ------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
GAAP net loss
attributable to
common stockholders $ (1,238) $ (4,287) $ (7,124) $(14,261) $(17,426)
Non-GAAP adjustments:
Stock-based
compensation:
Cost of net
revenues 41 45 63 102 173
Research and
development 1,006 996 1,834 3,524 5,421
Sales and
marketing 354 326 647 1,048 1,881
General and
administrative 797 853 914 2,552 2,979
-------- -------- -------- -------- --------
Total
stock-based
compensation 2,198 2,220 3,458 7,226 10,454
Acquisition-related
items:
Amortization of
purchased
intangible
assets:
Cost of net
revenues 406 405 1,590 1,217 4,420
Operating
expenses -- -- 713 16 2,022
Impairment of
goodwill and
intangible assets -- -- -- 208 --
Restructuring
charges 70 979 209 2,173 1,278
Write off of debt
issuance costs -- -- -- -- 476
Retention bonuses -- -- -- -- 698
Write off of
in-process research
and development -- -- -- -- 1,300
-------- -------- -------- -------- --------
Total of non-GAAP
adjustments 2,674 3,604 5,970 10,840 20,648
-------- -------- -------- -------- --------
Non-GAAP net income
(loss) $1,436 $(683) $(1,154) $(3,421) $3,222
======== ======== ======== ======== ========
GAAP weighted average
shares (basic) 70,146 69,424 67,669 69,473 67,378
Non-GAAP adjustment
for dilutive
shares (a) 4,313 -- -- -- 5,834
-------- -------- -------- -------- --------
Non-GAAP weighted
average shares
(basic and diluted) 74,459 69,424 67,669 69,473 73,212
======== ======== ======== ======== ========
GAAP net loss per
share (basic and
diluted) $(0.02) $(0.06) $(0.11) $(0.21) $(0.26)
Non-GAAP adjustments
detailed above (a) 0.04 0.05 0.09 0.16 0.30
-------- -------- -------- -------- --------
Non-GAAP net income
(loss) per share
(basic and diluted) $0.02 $(0.01) $(0.02) $(0.05) $0.04
======== ======== ======== ======== ========
(a) Shares included for calculating diluted earnings per share for
periods with non-GAAP net income. For the periods shown with a net
loss, no shares were included for the diluted earnings per share
calculation, as including such shares would be antidilutive.
CONTACT: Entropic Communications, Inc.
Investor Contact:
Debra Hart, Director, Investor Relations
858.768.3852
debra.hart@entropic.com
The Ardell Group
Media Contacts:
Angela Edgerton
858.792.2941
angela@ardellgroup.com
2009 GlobeNewswire, Inc.
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