Cypress Reports Third-Quarter 2011 Results | Cypress Semiconductor
Cypress Reports Third-Quarter 2011 Results
CLICK HERE FOR Q311 FINANCIAL RESULTS
SAN JOSE, Calif., October 20, 2011 —Cypress Semiconductor Corp. (NASDAQ: CY) today announced third-quarter 2011 results, which included the following highlights and remarks from its president and CEO, T.J. Rodgers.
• Q3 EPS exceeded Street estimates
• Achieved highest level of non-GAAP net income since 2000
• Q3 cash flow from operations totaled $106.1 million, a 38% sequential increase
• Repurchased 18.3 million shares in Q3; initiated a new $400 million repurchase program
• Introduced industry-leading TrueTouch® Gen4 Touchscreen solution; seeing rapid customer adoption
Our revenue and earnings for the quarter are given below, compared with the prior-quarter and prior-year results:
After posting revenue growth well above seasonal rates in Q2, we were pleased with 4% sequential growth in Q3, despite the challenging macroeconomic environment. Nonetheless, that growth was at the low end of our guidance due to weakness in the distribution channel during the last weeks of the quarter. Our Consumer and Computation Division (CCD), which includes our PSoC family of products, remained our largest division with 54% of revenue and 55% year-on-year growth. CCD growth in turn came from mobile handsets, our largest end market, which increased 158% year-over-year, driven by our broad, PSoC-powered TrueTouch product portfolio.
Our non-GAAP1 net income of $69 million grew 10% sequentially to its highest level since 2000 and at a rate 2.5x faster than revenue growth, due to our ongoing focus on driving operating leverage and cash flow.
Due to a combination of macroeconomic concerns, customer-specific issues, a decrease in distributor bookings, and our lowest lead times in years, we saw a large decrease in backlog and bookings in all divisions during the quarter. Our book-to-bill of 0.61 in Q3’11 was below our seasonal average; for example, our Q3’10 book-to-bill ratio was 0.83.
We were 84% booked entering Q4, but we expect revenue to decline by more than the seasonal average due to limited visibility and continued market uncertainty. Said another way, a typically weak Q4 will be somewhat weaker in this environment. Nonetheless, we remain pleased with customer acceptance of our strong and diverse product portfolio and the resulting design-win momentum. We still expect to end the year with our revenue growing at over twice the industry average and our profit growing even faster.
Our non-GAAP1 consolidated gross margin for the third quarter was 57.9%, up 0.7 percentage points from the previous quarter due mainly to product mix and factory absorption. Our GAAP third-quarter consolidated gross margin was 56.3%.
Our net inventory dollars and days of inventory increased slightly in the quarter mainly due to distributors slowing orders.
Cash and investments for the third quarter totaled $148 million, a decrease of $230 million from the prior quarter. During the quarter we repurchased 18.3 million shares of common stock (10.7% of Q2 outstanding shares) for $317.2 million. This repurchase completed our $600 million repurchase program during which we bought back 32.6 million shares over twelve months. Cypress’s board of directors approved a new $400 million stock repurchase program on September 20, 2011.
Our divisional revenue and gross margins are detailed below:
1. Refer to “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” following this press release for a detailed discussion of management’s use of non-GAAP financial measures, as well as reconciliations of all non-GAAP financial measures presented in this press release to the most directly comparable GAAP financial measures.
2. CCD – Consumer and Computation Division; DCD—Data Communications Division; MPD—Memory Products Division.
3. “Emerging Technology” – Businesses outside our core semiconductor businesses outlined in footnote 4. Includes subsidiaries Cypress Envirosystems and AgigA Tech, as well as the ONS (Optical Navigation System) Business Unit, the China Business Unit and our foundry-support business.
4. “Core Semiconductor” – Includes CCD, DCD and MPD and excludes “Emerging Technology.”
THIRD-QUARTER 2011 HIGHLIGHTS
Cypress introduced its new Gen4 family of TrueTouch touchscreen controllers. Gen4 delivers industry-best performance in all measurable categories, including the world's best Signal-to-Noise Ratio (SNR) and unparalleled performance in the presence of noise sources—the biggest challenge faced in touchscreen designs. It is the first and only commercially available touchscreen chip that directly drives the touch panel at 10V, 3x to 4x higher than the drive voltage on competing products. This feature allows Cypress to offer an SNR of 3x to 4x that of the next-closest competitor. The Gen4 family further raises the SNR bar as the first touchscreen device family to completely eliminate display noise in hardware. Gen4's patent-pending Display Armor™ feature offers unprecedented immunity to noise from every type of display, enabling manufacturers to get rid of air gaps and shields in displays to produce thinner, sleeker cell phone designs.
Cypress introduced PSoC Creator™ 2.0, the second-generation of its successful integrated design environment for the PSoC 3 and PSoC 5 programmable system-on-chip families. The software now interoperates with the Keil µVision® 4, an industry-leading firmware development tool. PSoC Creator 2.0 also adds 11 new, preconfigured peripheral components that can easily be dropped into designs. PSoC Creator 2.0 is available to select customers through the Cypress Design Community (www.cypress.com/go/community).
Acer selected Cypress’s TrueTouch multitouch solution for large touchscreens to drive the displays on the Acer Iconia™ Tab A100. The Tab A100 is the industry’s first seven-inch tablet based on the Android™ Honeycomb platform.
Cypress’s announced that its TrueTouch controllers drive touchscreens in the DragonBoard development platform, based on Qualcomm’s dual-core Snapdragon™ APQ8060 processor. The new Android platform for smartphone/tablet application development and testing comes with either a 10.1-inch touchscreen driven by Cypress’s CY8CTMA884 TrueTouch chip, or a four-inch screen driven by Cypress’s CY8CTMA340 TrueTouch chip.
Cypress announced a CapSense Express solution that enables designers to implement capacitive matrix button keypad systems of up to 4 x 4 buttons without having to write firmware or learn new software tools. The CY8CMBR2016 leverages Cypress’s revolutionary SmartSense™ Auto-tuning algorithm, which eliminates the requirement for system tuning and is the only solution that adjusts to environmental conditions in real time.
Cypress introduced the PSoC 3 CapSense Plus Design Kit (CY8CKIT-031) for buttons, sliders, touchpads, and proximity sensing. The kit leverages two Cypress products, the PSoC 3 programmable system-on-chip and the CapSense capacitive touch-sensing solution, combining capacitive sensing and system control in a single solution.
Cypress introduced its next-generation 2.4-GHz WirelessUSB™ radio-system-on-a-chip, a low-power solution for wireless keyboards, mice, remote controls and other human interface devices. The new WirelessUSB NL product (CYRF8935) extends battery life with standby current of less than 1 uA.
Altera selected Cypress’s Quad Data Rate™ II (QDR® II) and QDR II SRAMs for its new Stratix® V GX FPGA reference design. Cypress QDR SRAMs enable the reference design to deliver line rates up to 100 Gbps. The Stratix V GX FPGA family addresses high-bandwidth applications such as networking line cards, advanced LTE basestations, high-end RF cards and military radar.
Cypress announced plans to expand its investment in the development and manufacturing of next-generation, high-performance synchronous SRAMs for high-speed networking equipment. The company will extend the Quad Data Rate (QDR) architecture with new products in 2012, and it recently completed a major capacity expansion with a foundry partner that triples capacity for its advanced 65-nm SRAM products with very low lead-times. Cypress is also expanding its patented Autoline packaging and test capability. These investments are consistent with the company’s long-term product strategy and come amid reports from several customers that Samsung Semiconductor will “end of life” its synchronous SRAM products by the end of next year.
Cypress introduced the industry’s first 128-Mbit, 64-Mbit and 32-Mbit MoBL® (More Battery Life) Asynchronous SRAMs with 32-bit bus widths. The new, wider MoBL SRAMs, which target telecommunications, computing, consumer, medical and military applications, enable higher system performance when interfacing with DSPs, FPGAs or microprocessors of the same bus width.
Cypress and United Microelectronics Corporation (UMC), a leading global semiconductor foundry, announced that they have produced working silicon on a new, 65-nanometer SONOS (Silicon Oxide Nitride Oxide Silicon) technology for embedded Flash memory. UMC will manufacture next-generation PSoC programmable system-on-chip solutions on the new process, along with nvSRAMs and other Cypress products. UMC will make this technology available to other companies under a licensing agreement with Cypress.
Cypress’s board of directors approved a third-quarter 2011 cash dividend of $0.09 per share, payable to holders of record of the Company's common stock at the close of business on October 6, 2011. This dividend will be paid on October 20, 2011.
Cypress announced that semiconductor industry veteran, Kazuyoshi “Kazu” Yamada, has joined Cypress Japan as Vice President, Japan Strategic Accounts. Yamada served in senior leadership roles at NEC’s semiconductor group and at Renesas for more than 33 years. Most recently, he was senior vice president of the $3.6 billion System-on-Chip business unit at Renesas with profit and loss responsibility.
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 2011 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 strength, growth and diversity of our proprietary and programmable products as evidenced by design wins, including our TrueTouch and PSoC product families, our expectations regarding our Q411 revenue, our expectations regarding our year end revenue and profits as compared against the industry average, our product features, our backlog and Q4 bookings, and our focus on operating leverage and cash flow 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, the uncertainty, seasonality and our visibility into the markets we serve, whether our products perform as expected, whether the demand for our proprietary and programmable products, including our TrueTouch and PSoC products, is fully realized, whether our product and design wins result in increased sales, the actions of our competitors and customers, our ability to manage our business to have strong earnings and cash flow leverage, factory utilization, 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, Display Armor, West Bridge, EZ-USB, TrueTouch, and QDR are registered trademarks of Cypress Semiconductor Corp. Programmable System-on-Chip, TrueTouch, SmartSense, Charger Armor, WirelessUSB, Quad Data Rate, and PSoC Creator are trademarks of Cypress Semiconductor Corp. Keil uVision is a trademark of ARM Limited. Snapdragon is a trademark of Qualcomm. All other trademarks or registered trademarks are the property of their respective owners.