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Press ReleaseEZchip Announces First Quarter 2009 Results and Second Quarter Outlook
Yokneam, Israel, May 7, 2009 – EZchip Semiconductor Ltd. (NASDAQ: EZCH) (formerly LanOptics Ltd.), a provider of network processors, today announced its results for the first quarter ended March 31, 2009 and outlook for the second quarter.
First Quarter 2009 Highlights:
Second Quarter 2009 Outlook: EZchip’s principal customer, which accounts for more than half of EZchip’s total revenues, has notified EZchip of intention to consume existing inventory in the second quarter of 2009 thereby substantially reducing its purchases of processors from EZchip. This is expected to have a material adverse effect on EZchip’s revenue level in the second quarter, resulting in a substantial year-over-year quarterly decline. EZchip believes that sales by this customer of products incorporating EZchip’s processors will continue to grow. This customer is expected to resume its purchases of processors scheduled for delivery in June 2009, and is forecasting that in the third quarter of 2009, purchases of processors will return to previously seen levels.
First Quarter 2009 Results: Total revenues in the first quarter of 2009 were $9.8 million, an increase of 42% compared to $7.0 million in the first quarter of 2008, and an increase of 3% compared to $9.6 million in the fourth quarter of 2008.
Net income on a GAAP basis for the first quarter of 2009 was $1.4 million, or $0.05 per share (diluted), compared to a net loss of $6.3 million, or $0.28 per share, in the first quarter of 2008, and net income of $1.0 million, or $0.04 per share (diluted), in the fourth quarter of 2008. Net income on a non-GAAP basis for the first quarter of 2009 was $3.3 million, or $0.13 per share (diluted), compared with non-GAAP net income of $0.5 million, or $0.02 per share (diluted), in the first quarter of 2008, and non-GAAP net income of $2.6 million, or $0.10 per share (diluted), in the fourth quarter of 2008.
Cash, cash equivalents and marketable securities as of March 31, 2009, totaled $50.4 million compared to $48.1 million as of December 31, 2008.
Eli Fruchter, CEO of EZchip Semiconductor commented, “In the first quarter of 2009 we increased revenues and attained strong growth in all financial parameters, reaching operating income margins of 31% and net income margins of 34% (non-GAAP). During the first quarter our customers for both versions of our NP-3 processor started to ship in production quantities and we expect volumes to ramp up in the coming quarters. During the first quarter we also signed an agreement appointing Marvell as the sole ASIC vendor for our NP-4 processors. As for customer wins, we have continued our design win momentum, signing up more customers for the NP-4 and won several tier-1 Passive Optical Network (PON) players that intend to use our NPA processors for their next generation PON products.”
“Looking ahead, the use of video on the net continues to grow which will drive the growth in the CESR market. We therefore believe that the revenue decline that we expect for Q2 is a singular event and should not affect our long term growth and prospects.” concluded Mr. Fruchter.
Conference Call The Company will be hosting a conference call today, May 7, 2009, at 10:00am ET, 07:00am PT, 03:00pm UK time and 05:00pm Israel time. On the call, management will review and discuss the results, and will be available to answer investor questions.
To participate through live webcast, please access the corporate website, http://www.ezchip.com, at least 10 minutes before the conference call commences.
To participate through dial-in, please call one of the following teleconferencing numbers. Please begin placing your calls at least 15 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
For those unable to listen to the live call, a replay of the call will be available the day after the call under the 'Investor Relations' section of the website.
Use of Non-GAAP Financial Information In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which EZchip Semiconductor believes are the principal indicators of the operating and financial performance of its business. The non-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with SFAS 123R, amortization of intangible assets, in-process research and development charge and minority interest in loss of EZchip Technologies. Management believes the non-GAAP financial measures provided are useful to investors’ understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.
About EZchip EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment. EZchip provides its customers with solutions that scale from 1-Gigabit to 100-Gigabits per second with a common architecture and software across all products. EZchip's network processors provide the flexibility and integration that enable triple-play data, voice and video services in systems that make up the new Carrier Ethernet networks. Flexibility and integration make EZchip's solutions ideal for building systems for a wide range of applications in telecom networks, enterprise backbones and data centers. For more information on our company, visit the web site at http://www.ezchip.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that are not historical facts and may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. These statements are only predictions based on EZchip's current expectations and projections about future events. There are important factors that could cause EZchip's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Those factors include, but are not limited to, the impact of general economic conditions, competitive products, product demand and market acceptance risks, customer order cancellations, reliance on key strategic alliances, fluctuations in operating results, delays in development of highly-complex products and other factors indicated in EZchip's filings with the Securities and Exchange Commission (SEC). For more details, refer to EZchip's SEC filings and the amendments thereto, including its Annual Report on Form 20-F filed on March 30, 2009 and its Current Reports on Form 6-K. EZchip undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law.
Contact: Ehud Helft / Fiona Darmon CCGK Investor Relations Tel: (US) 1 646 797 2868 / 1 646 201 9246
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