SAN DIEGO, April 30, 2009 (GLOBE NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon solutions to enable connected home entertainment, today reported its first quarter results for the period ended March 31, 2009. Entropic reported first quarter net revenues of $24.1 million, a decrease of 18% compared with $29.5 million in the fourth quarter of 2008 and 43% lower than in the first quarter of 2008.
In accordance with U.S. generally accepted accounting principles (GAAP), the company's first quarter net loss was $8.7 million, or ($0.13) per share (basic and diluted). This compares with GAAP net loss of $118.9 million, or ($1.74) per share (basic and diluted) in the fourth quarter of 2008. Non-GAAP net loss in the first quarter was $4.2 million, or ($0.06) per share (basic and diluted), compared to non-GAAP net loss of $0.4 million, or ($0.01) per share (basic and diluted) in the fourth quarter of 2008.
"During the quarter, we saw strong momentum in support of the MoCA standard and our MoCA products," noted Patrick Henry, president and CEO of Entropic Communications. "Entropic's product positioning in our target markets is excellent, our end customers continue to show strength, and we have some solid new design wins and product cycles that we expect to ramp later this year."
Three months ended
---------------------------
(In millions, except per share data) Mar. 31, Dec. 31, Mar. 31,
2009 2008 2008
Net revenues $24.1 $29.5 $42.0
GAAP net loss ($8.7) ($118.9) ($3.9)
GAAP net loss per share (basic and
diluted) ($0.13) ($1.74) ($0.06)
Non-GAAP net (loss) income (1) ($4.2) ($0.4) $3.2
Non-GAAP net (loss) income per share (1) ($0.06) ($0.01) $0.04
1. Please refer to 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
* Delivered samples of our third-generation (MoCA 1.1), 65nm,
single-chip c.LINK solution for MoCA home networking providing
higher performance, a smaller footprint and lower overall system
costs to our customers
* Conducted a live demonstration of our c.LINK MoCA solution working
in conjunction with our Channel Stacking Switch (CSS) technology on
a single cable network at the recently held ASTRA Industry Days
* Extended our collaboration with Cavium Networks to align roadmaps
and deliver second and third generation solutions with enhanced
features and capabilities to meet the future needs of service
provider customers
* Partnered with Texas Instruments to create multiple DOCSIS 3.0
embedded media terminal adapter (eMTA) and gateway development
platforms optimized for triple-play and next-generation IP services
that utilize MoCA 1.1 for the home network
* Confirmed that Time Warner Cable plans to deploy new MoCA-certified
set-top boxes with Entropic's MoCA chipsets embedded to deliver
multi-room DVR and other connected home entertainment services to
its subscriber base later this year
* Announced that Cox Communications will deploy new MoCA-certified
set-top boxes with Entropic's MoCA chipsets embedded to deliver
multi-room DVR and other connected home entertainment services to
its subscriber base later this year
For More Information
Entropic management will be holding a conference call today, April 30, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company's results for the first quarter and to provide guidance for the second quarter. You may access the conference call via any of the following:
Teleconference: 719-325-4803 Conference ID: 5444194 Web Broadcast: http://ir.entropic.com/events.cfm Replay: 719-457-0820
About Entropic Communications
Entropic Communications, Inc. is a leading fabless semiconductor company that designs, develops and markets system solutions that enable connected home entertainment. The company's technologies significantly change the way high-definition television-quality video and other multimedia content such as movies, music, games and photos are brought into and delivered throughout the home. For more information please visit: www.entropic.com.
The Entropic Communications logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4255
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 momentum for the MoCA standard and our MoCA products, our product positioning, the financial position of our end customers, and our expectations regarding design wins and product cycles. 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; the ability of our customers or the service providers who purchase their products to successfully compete and continue to grow in their markets; the continued development of the market for HD video and other multi-media content delivery and networking solutions based on the MoCA standard; 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 related to international operations including political and economic conditions in foreign markets; and other factors discussed in the "Risk Factors" section of Entropic's Annual Report on Form 10-K for the year ended December 31, 2008. 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
-------------------------------
March 31, Dec 31, March 31,
2009 2008 2008
--------- --------- ---------
(unaudited)(unaudited)(unaudited)
Net revenues $ 24,123 $ 29,531 $ 41,988
Cost of net revenues 11,904 15,397 22,837
--------- --------- ---------
Gross profit 12,219 14,134 19,151
Operating expenses:
Research and development 13,323 12,876 13,313
Sales and marketing 3,637 3,672 4,144
General and administrative 2,689 2,890 3,523
Amortization of purchased intangibles 16 713 596
Restructuring charge (benefit) (1) 1,124 (19) 1,079
Impairment of goodwill
and intangible assets (2) 208 113,193 --
--------- --------- ---------
Total operating expenses 20,997 133,325 22,655
--------- --------- ---------
Loss from operations (8,778) (119,191) (3,504)
Other income (expense), net 59 80 (198)
--------- --------- ---------
Loss before income taxes (8,719) (119,111) (3,702)
--------- --------- ---------
Income tax provision (benefit) 17 (168) 154
--------- --------- ---------
Net loss attributable
to common stockholders $ (8,736) $(118,943) $ (3,856)
========= ========= =========
Net loss per share attributable
to common stockholders
(basic and diluted) $ (0.13) $ (1.74) $ (0.06)
========= ========= =========
Weighted average shares
(basic and diluted) 68,799 68,239 66,662
========= ========= =========
(1) During the three months ended March 31, 2009, the Company recorded
restructuring charges of $1,124,000 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. Additional
costs are expected to be recorded in the second quarter as the
Company completes the plan. During the three months ended
December 31, 2008, the Company recorded a restructuring charge
adjustment of $19,000 related to the August 2008 restructuring
plan to improve its operating cost structure which included a
reduction-in-force. During the three months ended March 31, 2008,
the Company recorded restructuring charges of $1,079,000 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 the
acquisition of Arabella were fully impaired as the developed
technology acquired would no longer be used in the ongoing
business operations. During the three months ended December 31,
2008, the Company performed an impairment analysis on goodwill and
purchased intangible assets and recorded an impairment charge of
$88,081,000 and $25,112,000, respectively, as the carrying value
of these assets exceeded the fair value at December 31, 2008.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
March 31, Dec 31,
2009 2008
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 30,602 $ 30,071
Marketable securities 849 4,339
Accounts receivable, net 17,181 13,915
Inventory 14,979 18,693
Prepaid expenses and other current assets 3,345 2,785
--------- ---------
Total current assets 66,956 69,803
Property and equipment, net 12,802 13,046
Intangible assets, net 2,839 3,469
Other long-term assets 262 284
--------- ---------
Total assets $ 82,859 $ 86,602
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 10,440 $ 7,873
Accrued payroll and benefits 3,559 3,498
Deferred revenues 185 467
--------- ---------
Total current liabilities 14,184 11,838
Long-term liabilities:
Stock repurchase liability 677 784
Other long-term liabilities 3,088 3,231
--------- ---------
Total long-term liabilities 3,765 4,015
Stockholders' equity 64,910 70,749
--------- ---------
Total liabilities and stockholders' equity $ 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 (loss) income and net (loss) income 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 (loss) income and
net (loss) income 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
-------------------------------
March 31, Dec 31, March 31,
2009 2008 2008
--------- --------- ---------
GAAP net loss attributable
to common shareholders $ (8,736) $(118,943) $ (3,856)
Non-GAAP adjustments:
Stock-based compensation:
Cost of net revenues 16 78 46
Research and development 1,522 1,627 1,758
Sales and marketing 368 453 623
General and administrative 902 875 1,197
--------- --------- ---------
Total stock-based compensation 2,808 3,033 3,624
Acquisition-related items:
Amortization of purchased
intangible assets:
Cost of net revenues 406 1,590 1,240
Operating expenses 16 713 596
Impairment of goodwill & intangible
assets 208 113,193 --
Restructuring charge (benefit) 1,124 (19) 1,079
Write off of debt issuance costs -- -- 476
--------- --------- ---------
Total of non-GAAP adjustments 4,562 118,510 7,015
--------- --------- ---------
Non-GAAP net (loss) income $ (4,174) $ (433) $ 3,159
========= ========= =========
GAAP weighted average shares (basic) 68,799 68,239 66,662
Non-GAAP adjustment for dilutive
shares (a) -- -- 6,980
--------- --------- ---------
Non-GAAP weighted average shares
(diluted) 68,799 68,239 73,642
========= ========= =========
GAAP net loss per share (basic and
diluted) $ (0.13) $ (1.74) $ (0.06)
Non-GAAP adjustments detailed
above (a) 0.07 1.73 0.10
--------- --------- ---------
Non-GAAP net (loss) income per share
(diluted) $ (0.06) $ (0.01) $ 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.
ENTROPIC COMMUNICATIONS, INC.
Unaudited Non-GAAP Supplemental Financial Information
(In thousands, except percentage data)
The following table sets forth certain non-GAAP financial measures
used in calculating Entropic's non-GAAP net (loss) income for the
periods presented. Such non-GAAP financial measures are based upon
Entropic's unaudited consolidated statements of operations for the
periods presented and give effect to certain adjustments identified in
the table. The presentation of such non-GAAP financial 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. In addition, investors should not rely on the
results of prior periods as an indication of Entropic's future
performance.
Three Months Ended
-------------------------------
March 31, Dec 31, March 31,
2009 2008 2008
--------- --------- ---------
NET REVENUES $ 24,123 $ 29,531 $ 41,988
COST OF NET REVENUES:
GAAP cost of net revenues $ 11,904 $ 15,397 $ 22,837
Less:
Stock-based compensation expense 16 78 46
Amortization of
developed technology 406 1,590 1,240
--------- --------- ---------
Non-GAAP cost of net revenues $ 11,482 $ 13,729 $ 21,551
========= ========= =========
GROSS PROFIT:
GAAP gross profit $ 12,219 $ 14,134 $ 19,151
Add:
Stock-based compensation expense 16 78 46
Amortization of
developed technology 406 1,590 1,240
--------- --------- ---------
Non-GAAP gross profit $ 12,641 $ 15,802 $ 20,437
========= ========= =========
GAAP gross margin 50.7% 47.9% 45.6%
Non-GAAP gross margin 52.4% 53.5% 48.7%
OPERATING EXPENSES:
GAAP operating expenses $ 20,997 $ 133,325 $ 22,655
Less:
Stock-based compensation expense 2,792 2,955 3,578
Amortization of purchased
intangibles 16 713 596
Restructuring charge (benefit) 1,124 (19) 1,079
Impairment of goodwill
& intangible assets 208 113,193 --
--------- --------- ---------
Non-GAAP operating expenses $ 16,857 $ 16,483 $ 17,402
========= ========= =========
OTHER INCOME (EXPENSE), NET:
GAAP other income (expense), net $ 59 $ 80 $ (198)
Add:
Write off of debt issuance costs -- -- 476
--------- --------- ---------
Non-GAAP other income, net $ 59 $ 80 $ 278
========= ========= =========
INCOME TAX (PROVISION) BENEFIT $ (17) $ 168 $ (154)
RESEARCH AND DEVELOPMENT EXPENSE:
GAAP research and development $ 13,323 $ 12,876 $ 13,313
Less:
Stock-based compensation expense 1,522 1,627 1,758
--------- --------- ---------
Non-GAAP research and development $ 11,801 $ 11,249 $ 11,555
========= ========= =========
SALES AND MARKETING EXPENSE:
GAAP sales and marketing $ 3,637 $ 3,672 $ 4,144
Less:
Stock-based compensation expense 368 453 623
--------- --------- ---------
Non-GAAP sales and marketing $ 3,269 $ 3,219 $ 3,521
========= ========= =========
GENERAL AND ADMINISTRATIVE EXPENSE:
GAAP general and administrative $ 2,689 $ 2,890 $ 3,523
Less:
Stock-based compensation expense 902 875 1,197
--------- --------- ---------
Non-GAAP general and administrative $ 1,787 $ 2,015 $ 2,326
========= ========= =========