For first-quarter 2013, GigOptix Inc of San Jose, CA, USA (a fabless supplier of analog semiconductor and optical communications components enabling high-speed end-to-end information streaming over optical fiber and wireless networks) has reported revenue of $6.9m, down 25% on $9.2m a year ago and 12.6% on $7.9m last quarter (although that included $0.9m of previously unrecognized government contract revenue; excluding this, product revenue was roughly level quarter-on-quarter).
On a non-GAAP basis, gross margin has risen from 56% a year ago and 60% last quarter to a record 65%. Excluding $1.1m in stock-based compensation, $1m of restructuring related expenses, $0.4m in special litigation-related expenses, and $0.3m in amortization of intangible assets, net income was $0.2m. This compares with net loss of $0.4m a year ago and $0.1m last quarter (or $1m, excluding the $0.9m in one-time deferred government contract revenue). Adjusted EBITDA was $0.7m, up from $0.5m a year ago and level with $0.7m last quarter (or a loss of $0.2m, excluding the $0.9m government contract revenue).
During the quarter, cash and cash equivalents fell from $10.1m to $9.5m. "We made our last payment for the 2012 acquisition of the E-band licenses from IBM in the March quarter, and we do not expect to use significant cash for operations or working capital in the second quarter," says senior VP & chief financial officer Curt Sacks. "Therefore, we anticipate we will maintain cash and cash equivalents at similar levels to the first quarter."
"We are pleased to have returned the company to non-GAAP profitability and significantly increased the adjusted EBITDA profitability in the first quarter, which is generally a seasonally weak quarter for our business and industry, with this year being weaker than in previous years," says chairman & CEO Dr Avi Katz.
"The dominating factors supporting our enhanced profitability were the substantial improvement to our gross margin, which reached a record 65%, and the significant revenue growth of our optical components business, which increased 25% over the prior quarter, following on the 60% growth from this product line in fiscal 2012 over fiscal 2011," Katz notes.
"These gains have been driven mainly by our increased shipments of production devices for the fastest-growing deployments of the telecom and datacom optical industries, with remarkable production shipments of the related devices," Katz says.
"This includes the 4 and 12 parallel channels of 10-14Gbps drivers and amplifiers for datacom QSFP active optical cables (AOCs) where, based on industry data, our volume production device shipments command approximately 30%, or a dominant percentage, of the total QSFP short-reach and long-reach active optical cable devices," he adds. "On the telecom side, based on industry data, we believe that with our volume production device shipments we have an approximately 50% market share in the fast growing 100Gbps coherent line-card driver market." ?
"In addition, we have been expanding on our leading datacom technology by launching activities to deploy our devices into the consumer electronics industry, mainly for enhanced connectivity, and advanced 3D recognition and gesture tracking engines, which we expect will start to generate new revenue opportunities for us later this year and into 2014," Katz says.
"We completed the end-of-life process of the low-margin products that we inherited with our acquisitions of ChipX and Endwave," notes Katz. "By removing all those parts from our active portfolio we have stabilized revenue from these product lines and believe the March quarter revenue will be the low point, with revenue growth from these non-optical-related products starting in the June quarter at a similar gross margin to the current quarter," he adds.
"To solidify our lead position as transceiver devices supplier into the next generation of systems, we have expanded the number of joint development programs (JDP) that we have with major tier-1 OEMs, with customers funding contracts that totaled approximately $1m in the first quarter," says Katz. "These JDP contracts are important to us as they support rapid development of customized reference design platforms for next-generation telecom integration of small-form-factor optical system modules such as CFP2 and CFP4. Those platforms are based on our Telcordia-proofed thin-film-polymer-on-silicon (TFPS) modulator chips bundled with our drivers and TIAs, and using our advanced packaging architecture, which we expect should materialize to production revenue with those customers in fiscal year 2014," he adds.
"Through all of these activities alongside our financial streamlining and enhancements, we have built significant leverage into our business model that should translate into continuous accelerating profitability, and better shareholder value, as we are ready and looking forward to the eventual improvement in the telecommunications carrier spending environment," Katz concludes.
"We have yet to see a tangible improvement in the markets we serve, particularly in the 100Gbps telecom market where lead times remain historically short. This continues to make forecasting our financial performance difficult," says Sacks. "While we expect our datacom-related revenue to increase, given this lack of clarity in the telecom environment, and the continuous average sales price erosion, we currently believe second quarter revenue will be about flat with the $6.9m we recorded in the first quarter," he adds. "Longer-term, we continue to track the telecom carriers announcements of releasing the 100Gbps infrastructure spending, as we are clearly prepared and ready with production-worthy devices to support these systems." ?
Compensation matters
On 1 May, the board of directors granted annual awards of stock options and restricted stock units to staff. However, the board decided not to make such grants at this time to executive officers and directors.
Litigation against M/A-Com Tech (Optomai)
As announced on 29 January, the lawsuit against defendants M/A-COM Technology Solutions Inc of Lowell, MA, USA (which makes semiconductors, components, and subassemblies for RF, microwave and millimeter-wave applications), its subsidiary Optomai Inc (a fabless semiconductor firm that develops ICs and modules for 40Gbps and 100Gbps fiber-optic networks), and three former GigOptix employees, is proceeding towards a two-week jury trial scheduled to begin in the Superior Court of Santa Clara County, California, on 26 August. GigOptix has been engaged in discovery, which includes forensic work and damages discovery, including related to the value of allegedly misappropriated trade secrets.
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