Cypress Reports Second-Quarter 2010 Results | Cypress Semiconductor
Cypress Reports Second-Quarter 2010 Results
Last Updated: July 22, 2010
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- Q2 results exceeded guidance
- Gross margin percentage at record levels
- Free cash flow increased 85% sequentially
- Book-to-bill, bookings, and backlog at multiyear highs
- Record Q3 revenue expected for TrueTouch™ touchscreen controllers and PSoC®
SAN JOSE, Calif., July 22, 2010 — Cypress Semiconductor Corp. (Nasdaq: CY) today announced that revenue for the 2010 second quarter was $223.0 million, up 10.2% from $202.3 million for the prior quarter, and up 43.1% from $155.8 million for the year-ago period.
Cypress recorded GAAP net income of $20.6 million in the 2010 second quarter, or diluted earnings per share of $0.11. This compares with last quarter’s diluted earnings per share of $0.07 and a diluted net loss per share in the year-ago second quarter of $0.32.
Non-GAAP1 net income for the 2010 second quarter—excluding stock-based compensation, acquisition-related charges, restructuring and other special charges and credits—totaled $48.1 million, or diluted earnings per share of $0.24. That compares with non-GAAP1 diluted earnings per share of $0.17 for the prior quarter and a diluted net loss per share of $0.03 for the year-ago second quarter.
“We are pleased to report our fifth consecutive quarter of increased revenue after the ‘Great Recession’ that started in Q4 2008,” said Cypress President and CEO T.J. Rodgers. “Revenue increased 10% sequentially with all divisions growing, led by our Memory and Imaging Division, which saw strong demand for our high-performance SRAMs from wireless and wireline networking customers and market share gains with strategic global accounts. Our mobile handset revenues increased 70% year-on-year due to strong demand for our programmable products, including our TrueTouch touchscreen products. In addition, our PSoC-based OvationONS™ optical finger navigation product began to ship in volume to the mobile handset market late in the quarter, helping to drive our Emerging Technology Division to 100% sequential growth in Q2.
“Our customers are continuing to provide increased booking visibility into Q3 and Q4,” Rodgers said. “Our book-to-bill at the end of Q2 remained very strong at 1.30, led by our Consumer and Computation Division. All divisions had a book-to-bill above 1.10.
“Our focus on value-added solutions is allowing us to generate design wins and strong revenue momentum in large and growing end markets,” Rodgers continued. “Coupled with a corporatewide focus on gross margin and operating expenses, this is allowing us to drive substantial operating and cash flow leverage, which we expect will continue to grow for the balance of 2010.”
Non-GAAP1 consolidated gross margin for the second quarter was 59.3%, up 3.7 percentage points from the previous quarter. The increase was due mainly to improved manufacturing efficiencies and product mix. Excluding Emerging Technologies3, our Core Semiconductor4 non-GAAP gross margin was 60.1%, up 3.7 percentage points sequentially.
On a GAAP basis, second-quarter consolidated gross margin was 56.0%, up 3.4 percentage points from the previous quarter. Our Core Semiconductor4 gross margin on a GAAP basis was 56.9%.
Net inventory at the end of the second-quarter decreased to 82 days, down 3.4% quarter-on-quarter and 2.5% year-on-year.
Cash and investments for the second quarter totaled $308.7 million, or $1.93 per outstanding share.
Additional second-quarter data and comparisons relevant to Cypress’s business units are presented below:
SECOND-QUARTER 2010 HIGHLIGHTS
Two of Cypress’s Emerging Technology Division units achieved their first $1 million revenue quarter, as projected in the 2009 Annual Report. The China Business Unit reported its first $2 million quarter in Q2 while the Optical Navigation Systems (ONS) business unit achieved its first $1 million quarter. Internal startups Cypress Envirosystems and AgigA Tech are also expected to achieve their first $1 million revenue quarters in 2010.
Cypress sampled its powerful, new PSoC 5 solution and introduced two PSoC 5 development kits: the PSoC 5 FirstTouch™ Starter Kit and the PSoC CY8C55 Family Processor Module Kit. PSoC 5 features a high-performance, 32-bit ARM® Cortex™-M3 processor and industry-leading analog capabilities. The solution targets markets such as industrial, medical, automotive, and consumer products as the central processor, not just a peripheral controller.
Cypress introduced a PSoC 3-based development kit that enables Made for iPod® licensees to quickly and easily design feature-rich accessories for iPod and iPhone products ranging from health and wellness products to diagnostics tools.
Cypress began sampling the CY832xx family of low-power PSoC 3 devices, making it easier for designers to integrate programmable digital logic capabilities into communications, servers and motor control end products.
LG Electronics has chosen Cypress’s CapSense touch-sensing solution to control buttons and LEDs in its new “LE” line of LED-backlit high-definition digital televisions.
Cypress achieved automotive qualification of its market-leading TrueTouch touchscreen and LIN-capable CapSense® touch-sensing devices. Cypress now offers the industry’s broadest portfolio of automotive-qualified capacitive touch-sensing products.
Cypress introduced the market’s first 32-Mbit and 64-Mbit fast asynchronous SRAMs. The devices feature fast response times and the industry’s smallest footprints. They are ideal for storage servers, switches and routers, test equipment and military systems.
Cypress named Akamai Technologies’ chief financial officer, J.D. Sherman, to its board of directors, expanding its board to eight members. Sherman, whose background also includes financial management positions at IBM and CommQuest, adds another strong financial management perspective to the Cypress board.
Cypress’s CEO, T.J. Rodgers, announced that the company’s San Jose headquarters was 75% powered on site from renewable energy sources, including solar panels and fuel cells. The company aims to achieve its goal of 100 percent energy independence by 2015 through efforts that could include energy conservation, electricity storage, and the installation of new and innovative energy sources being developed in Silicon Valley.
Cypress launched the Cypress Developer Community™, an online resource offering technical forums, videos and blogs to enable engineers to share best design practices when using Cypress’s products. The community is located at www.cypress.com/go/community.
Cypress’s wafer manufacturing facility in Bloomington, Minn., has been named a “Trusted Foundry” by the U.S. Department of Defense. This accreditation means that the factory meets stringent government criteria for manufacturing classified and unclassified defense products.
Cypress Envirosystems, a Cypress subsidiary, has been named one of the top innovative green companies by the California Public Utilities Commission. The company’s flagship product is a Wireless Pneumatic Thermostat that enables RF- and Internet-based remote temperature sensing and control.
Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC® programmable system-on-chip families and derivatives such as PowerPSoC® solutions for high-voltage and LED lighting applications, CapSense® touch sensing and TrueTouch™ solutions for touchscreens. Cypress is the world leader in USB controllers, including the high-performance West Bridge® solution that enhances connectivity and performance in multimedia handsets. Cypress is also a leader in high-performance memories and programmable timing devices. Cypress serves numerous markets including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the Nasdaq Global Select Market 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 remainder of fiscal year 2010 and the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may 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 semiconductor market, the future economic environment, our expected growth in our handset revenue, the strength and growth of our proprietary and programmable products, including TrueTouch, West Bridge and our PSoC-powered OvationONS optical navigation sensors, our expected product introductions and the revenue that may result from them, our ability to further penetrate the industrial, medical, automotive and consumer products market as the central processor, our expectations regarding our Q310 revenue and earnings, our expectations regarding our SRAM market share, positive signs gleaned from the ordering patterns of our customers, the demand and growth in the markets we serve, the booking patterns and visibility provided by our customers, our expectations regarding product and design wins, our expectations for sales and profit throughout 2010, our ability to achieve 100% energy independence by 2015, and our expected revenue from our Emerging Technology Division. 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 a variety of uncertainties and risk factors, including but not limited to the state of and future of the global economy, business conditions and growth trends in the semiconductor market, our ability to timely develop and roll out new products, our ability to enter into new markets with our portfolio of products, whether our products perform as expected, whether the demand for our proprietary and programmable products, including especially our TrueTouch, West Bridge, PSoC, and OvationONS products, is fully realized, whether our product and design wins result in increased sales, customer acceptance of Cypress and its subsidiaries’ products, seasonality in the markets we serve, our ability to achieve lower operating expenses and maintain a solid balance sheet, the actions of our competitors, the behavior of our supply chain, our ability to manage our business to have strong earnings and cash flow leverage, factory utilization, whether the expected growth in the markets we serve materializes, our ability to maintain and improve our gross margins and realize our bookings, the financial performance of our subsidiaries and Emerging Technology Division, our ability to outgrow the market in revenue once the economy recovers and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, PSoC, CapSense, PowerPSoC and West Bridge are registered trademarks of Cypress Semiconductor Corp. Programmable System-on-Chip, TrueTouch, OvationONS, FirstTouch, and Cypress Developert Community are trademarks of Cypress Semiconductor Corp. ARM is registered trademark and Cortex is a trademark of ARM Ltd. Made for iPod is a trademark of Apple Inc. All other trademarks or registered trademarks are the property of their respective owners.