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Press ReleaseEZchip Announces Second Quarter 2009 Results
Yokneam, Israel, August 3, 2009 – EZchip Semiconductor Ltd. (NASDAQ: EZCH), a provider of network processors, today announced its results for the second quarter ended June 30, 2009.
Second Quarter 2009 Summary:
Second Quarter 2009 Results: Total revenues in the second quarter of 2009 were $6.7 million, compared to $8.0 million in the second quarter of 2008, and $9.8 million in the first quarter of 2009. The lower quarterly revenues follow EZchip’s principal customer’s decision to temporarily reduce the purchase of processors from the Company during most of the second quarter and instead to consume existing inventory.
Net loss, on a GAAP basis, for the second quarter of 2009 was $0.7 million, or $0.03 loss per share, compared to a net loss of $0.1 million, or $0.01 loss per share, in the second quarter of 2008, and net income of $1.4 million, or $0.05 earnings per share (diluted), in the first quarter of 2009.
Net income, on a non-GAAP basis, for the second quarter of 2009 was $1.2 million, or $0.05 per share (diluted), compared to non-GAAP net income of $1.3 million, or $0.05 per share (diluted), in the second quarter of 2008, and non-GAAP net income of $3.3 million, or $0.13 per share (diluted), in the first quarter of 2009.
Cash, cash equivalents and marketable securities as of June 30, 2009, totaled $55.4 million, compared to $50.4 million as of March 31, 2009. Cash generated from operations during the quarter was $4.1 million, cash provided by financing activities was $0.1 million and additional $0.8 million resulted from unrealized gains in marketable securities.
First Six Months 2009 Results: Total revenues for the six months ended June 30, 2009 were $16.5 million, compared to $15.0 million for the six months ended June 30, 2008. Net income on a GAAP basis for the six months ended June 30, 2009 was $0.7 million or $0.02 per share (diluted), compared to net loss of $6.4 million, or $0.28 per share for the six months ended June 30, 2008. Net income on a non-GAAP basis for the six months ended June 30, 2009 was $4.6 million or $0.18 per share (diluted), compared with non-GAAP net income of $1.8 million, or $0.07 per share (diluted), for the six months ended June 30, 2008.
Eli Fruchter, CEO of EZchip commented, “I am pleased to report that the temporary decline in orders from our principal customer ended in May, and, starting from June, we witnessed a strong increase in orders from this customer and from other customers. This strong order pickup underscores our belief that the second quarter revenue shortfall was a singular event and we expect to return to, and potentially exceed, first quarter 2009 revenue levels already in the third quarter. In terms of profitability, we achieved this quarter healthy profit margins, enabling us to generate, despite the revenue shortfall, non-GAAP net income of $1.2 million and strong cash flow of $5 million, enabling us to end the quarter with a strong net cash position of over $55 million.”
“During the quarter, revenues from Marvell, the supplier of our specialized NP-3 processor to a leading CESR market player, grew considerably and exceeded $1 million, contributing, for the first time, more than 10% of our quarterly revenues. While these are still early days for the NP-3, with an expected lumpiness between the quarters, we believe that Marvell, through its sales to this leading CESR player has the potential to become our largest customer in the long term.”
“This quarter we also progressed in the development of our advanced and innovative next generation network processor, the NP-4, and remain on track for sampling in the fourth quarter of this year. The NP-4, which we believe is well ahead of comparable designs for enabling 200-Gigabit line cards, is a key component underlying EZchip’s long-term growth prospects. Furthermore, our NPA family of products, targeting the access market, is also progressing as planned, and is now sampling and entering the lab-testing phase. The NPA chip is our entry into the access market and we expect to soon introduce new software solutions to complement the offering. Our goal is to become a major player in the access market and further enhance the success we achieved in the CESR market with our NP family of products.”
Conference Call The Company will be hosting a conference call today, August 3, 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 net loss attributable to noncontrolling interest. 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.
IR Contact: Ehud Helft / Fiona Darmon CCGK Investor Relations Tel: (US) 1 646 797 2868 / 1 646 201 9246
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