Cypress Reports 2007 Third-Quarter Results: Record Revenue | Cypress Semiconductor
Cypress Reports 2007 Third-Quarter Results: Record Revenue
Click HERE to view Q3-2007 Business Unit Summary Financials
Click HERE to view Q3-2007 Quarterly Financial Data
- Record quarterly revenue of $449.5 million-SunPower and semiconductor group both grew strongly.
- Consolidated revenue increased 20.6% sequentially and 54.9% year-on-year.
- Semiconductor revenue increased 8.1% sequentially, or 12.2% adjusted for the Q2 PSRAM divestiture.
- PSoC®revenue exceeded expectations, set a new quarterly record and grew 27% sequentially.
- Cypress shipped its 250 millionth PSoC mixed-signal array during the quarter.
SAN JOSE, Calif., October 18, 2007 - Cypress Semiconductor Corp. (NYSE: CY) today announced that revenue for the 2007 third quarter was $449.5 million, a quarterly record, up 20.6% from prior-quarter revenue of $372.8 million and up 54.9% from year-ago third-quarter revenue of $290.2 million.
Cypress recorded GAAP net income of $29.8 million in the 2007 third quarter, or diluted earnings per share of $0.18. That compares with last quarter's diluted earnings per share of $2.29, which included a gain from the sale of SunPower shares. GAAP diluted earnings per share in the year-ago third quarter was $0.06.
Non-GAAP net income for the 2007 third quarter-earnings that exclude stock-based compensation, acquisition-related charges and other special charges and credits-totaled $44.9 million, or diluted earnings per share of $0.26. That compares with non-GAAP diluted earnings per share of $0.16 for both the prior quarter and the year-ago third quarter.
Cypress President and CEO T.J. Rodgers said, "Third-quarter revenue significantly exceeded our guidance due to the continued strong growth of our SunPower division and better-than-expected, seasonal semiconductor revenue-driven by CCD with record quarterly PSoC sales. Earnings leverage in the semiconductor group increased during the quarter in line with our projections, based in large part on our effort to refocus Cypress on programmable solutions and the continued success of our flexible manufacturing initiative. Revenue from programmable products reached 50% of our total semiconductor revenue for the first time in Q3, up from 43% in the second quarter."
Rodgers continued, "Semiconductor1 direct margins remained strong, and ASPs increased sequentially for the seventh consecutive quarter, due to continued growth in our higher-margin, proprietary, programmable products. Our new product introductions remain robust. Cypress's PSoC and West Bridge™ devices continue to achieve significant new designs, while SunPower has continued to take market share from its competitors. Our semiconductor business and SunPower division are expected to achieve fiscal 2007 revenues greater than current First Call estimates. Assuming we do not encounter any major macroeconomic disruptions, we are well positioned to sustain substantial revenue gains into 2008. Coupled with the focused operating expense and capital model and our flexible-manufacturing strategy, we expect to deliver increasing long-term profits and cash-flow."
Additional third-quarter data and comparisons relevant to Cypress's business units are presented below:
On a GAAP basis, third-quarter consolidated gross margin was 31.6%. Semiconductor gross margin for the third quarter was 45.4%, up 2.1 percentage points from the previous quarter.
Non-GAAP consolidated gross margin for the third quarter was 33.2%, down 1.5 percentage points from the previous quarter due to a higher mix of SunPower revenue.
Non-GAAP semiconductor margin for the third quarter was 47.2%, up 2.3 percentage points from 44.9% in the previous quarter. Semiconductor gross margin improved significantly in Q3 due to a favorable product mix and higher planned factory output. Semiconductor net inventory decreased in the quarter.
Consolidated GAAP diluted EPS of $0.18 increased 200.0% year-on-year. Consolidated non-GAAP diluted EPS of $0.26 increased 62.5% sequentially and 62.5% year-on-year.
Semiconductor book-to-bill ratio ended the quarter at 1.01, matching Q2.
THIRD-QUARTER 2007 HIGHLIGHTS
Cypress grew its PSoC customer base to nearly 5,300 customers, a gain of 13.9% quarter-on-quarter and 83.9% percent year-on-year, far exceeding its original plan. Cypress's global PSoC customers include Hewlett-Packard, Cisco Systems, LG Electronics, Lenovo, Nintendo and Pentax, along with a host of small- and mid-sized companies.
Cypress shipped its 250 millionth PSoC mixed-signal array, driven by new design wins, which have increased 27 percent year on year and reached a record again in Q3. New PSoC design wins for the quarter included the MERIAN Scout Navigator GPS Personal Travel Assistant by iPublish GmbH, which is using Cypress's CapSense™ touchscreen controller solution, and Haier Group's CapSense-enabled touch-sensing washing machines and water heaters.
Cypress introduced the PSoC FirstTouch™ Embedded Design Starter Kit, a $29.95 USB-compatible, thumbdrive solution that enables customers to develop and test applications right out of the box, including CapSense touch-sensing and temperature, light and proximity-sensing. The FirstTouch Kit represents the fastest, easiest, most cost-effective way for designers to begin working with PSoC hardware and software.
Cypress introduced PSoC Express™ 3.0, the latest generation of its revolutionary visual embedded system design software. PSoC Express software lets engineers create custom designs without writing a single line of complex microcontroller code. The latest version automates code generation and provides real-time design monitoring and tuning, accelerating the design process. PSoC Express 3.0 is an integral part of Cypress's FirstTouch kit.
Cypress integrated Philips Lumiled's Luxeon®K2 power LED device specifications into the content library of its PSoC Express 3.0 software. The software, part of Cypress's EZ-Color™ high-brightness (HB) LED solution, enables the creation of even the most challenging lighting designs with an intuitive, easy-to-use drag-and-drop interface. With their superior efficiency, color control and low power consumption, high-brightness LEDs are fast replacing conventional lighting solutions.
Cypress shipped its 20 millionth 2.4-GHz wireless controller. Sales were driven by Cypress's second-generation WirelessUSB™ LP and PRoC™ LP devices, which have secured more than 200 design wins in low-power wireless applications over the past year.
SunPower announced the opening of its second manufacturing plant in the Philippines. The 463,000-square-foot facility is twice the size of the company's first plant, with a projected capacity of 330 MW. It will produce SunPower's 22%-efficient, second-generation solar cells.
SunPower signed a 10-year silicon supply agreement with Hemlock Semiconductor Corp. Hemlock will begin delivering silicon to SunPower in 2010. The material is expected to support more than 2 gigawatts (GW) of SunPower silicon solar cell production. SunPower also signed two supply agreements with NorSun AS to support up to 2 GW of solar cell production.
SunPower launched a program to install solar-electric power systems at 28 Macy's department stores in California. The company also announced an agreement with Agilent Technologies to install a one-megawatt solar-electric system at its Santa Rosa, Calif., campus.
Cypress sampled its first nonvolatile SRAM (nvSRAM), a 4-Mbit device. This nvSRAM technology is the industry's only CMOS-based, battery-free, nonvolatile SRAM solution. The device combines Cypress's 15-ns, high-speed SRAM technology with high-endurance SONOS (Silicon Oxide Nitride Oxide Silicon) nonvolatile Flash, and is the first product manufactured on the company's 0.13-micron SONOS process. The nvSRAM is used in high-value, failsafe applications.
NetLogic Microsystems acquired Cypress's network search engine products targeting the high-volume desktop switching market. The transaction was valued at $12.0 million plus inventory costs. Cypress sold its NSE standard products business to NetLogic Microsystems in early 2006.
Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the PSoC Programmable System-on-Chip, USB controllers, general-purpose programmable clocks, and memories. Cypress also offers wired and wireless connectivity solutions ranging from its WirelessUSB radio system-on-chip, to West Bridge and EZ-USB FX2LP controllers that enhance connectivity and performance in multimedia handsets. Cypress serves numerous markets including consumer, computation, data communications, automotive, industrial, and solar power. Cypress trades on the NYSE under the ticker symbol CY. Visit Cypress online at www.cypress.com
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries' plans and expectations for the fourth quarter of 2007, 2008 and the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995."" We use words such as ""believe,"" ""expect,"" ""future,"" ""plan,"" ""intend"" and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the growth of our products, especially our proprietary products such as PSoC and West Bridge, our improved factory utilization, the success of our flexible manufacturing initiative to provide factory capacity, expected revenue growth, the demand and growth in the markets we serve, the stability of our ASPs, the effect of our divestitures, our growth, bookings, profit and revenue, and the success of SunPower's current and future projects. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including but not limited to the business and economic conditions and growth trends in the semiconductor and solar power industries, the state of the global economy, the actions of our competitors, our ability to develop and roll-out new products, our ability to execute on our flexible manufacturing plan and maintain lower operating expenses, whether our products perform as expected, whether the demand for our PSoC and West Bridge products is fully realized, customer acceptance of Cypress and it's subsidiaries' products, factory utilization, whether the expected growth in the markets we serve materializes, seasonality in the markets we serve, our ability to maintain and improve our gross margins and realize our bookings, the financial performance of our subsidiaries, and other risks described in our filings, as well as SunPower's filings, with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, and PSoC are registered trademarks of Cypress Semiconductor Corporation. PSoC Express, PRoC, Programmable System-on-Chip, FirstTouch, EZ-USB FX2LP, WirelessUSB, EZ-Color, CapSense, West Bridge and Antioch are trademarks of Cypress Semiconductor Corporation. SunPower is a registered trademark of SunPower Corporation. Luxeon is a registered trademark of Philips Lumileds. All other trademarks or registered trademarks are the property of their respective owners.