PMC-Sierra Reports Second Quarter 2010 Results

Net revenues of $160.7 million in Q2’10 and non-GAAP net income of $0.20/share

SANTA CLARA, Calif. — (BUSINESS WIRE) — July 22, 2010 — PMC-Sierra, Inc. (Nasdaq: PMCS), the premier Internet infrastructure semiconductor solution provider, today reported results for the second quarter ended June 27, 2010.

Net revenues in the second quarter of 2010 were $160.7 million, an increase of 30% compared to $123.2 million in the second quarter of 2009 and 5% higher than net revenues of $152.8 million reported in the first quarter of 2010.

Net income in the second quarter of 2010 on a GAAP basis was $30.1 million (GAAP diluted earnings per share of $0.13) compared with net income of $7.8 million (GAAP diluted earnings per share of $0.03) in the second quarter of 2009 and net income of $27.0 million (GAAP diluted earnings per share of $0.12) in the first quarter of 2010.

Non-GAAP net income in the second quarter of 2010 was $47.6 million (non-GAAP diluted earnings per share of $0.20), an increase of 60% above the $29.7 million (non-GAAP diluted earnings per share of $0.13) reported in the second quarter of 2009 and 9% above non-GAAP net income of $43.5 million (non-GAAP diluted earnings per share of $0.19) in the first quarter of 2010.

“In the second quarter of 2010, we benefited from continued growth in our Enterprise Storage and Fiber To The Home businesses,” said Greg Lang, president and chief executive officer of PMC-Sierra. “We’re also very pleased to have closed the asset purchase of Adaptec’s channel storage business in the second quarter to accelerate our access to channel customers worldwide.”

On June 8, 2010, the Company announced it had completed the acquisition of the channel storage business from Adaptec, Inc. for approximately $34 million in cash. The channel storage business includes Adaptec's RAID storage product line, the Adaptec brand, a well-established global value added reseller customer base, board logistics capabilities, and leading SSD cache performance solutions.

Net income on a non-GAAP basis in the second quarter of 2010 excludes the following items: (i) $6.8 million amortization of purchased intangible assets; (ii) $5.7 million stock-based compensation expense; (iii) $1.5 million costs related to the acquisition of the channel storage business from Adaptec, Inc.; (iv) $0.8 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and (v) $2.7 million income tax provision which includes $2.1 million tax effect on inter-company transactions.

For a full reconciliation of GAAP net income to non-GAAP net income, please refer to the schedule included with this release. The Company believes the additional non-GAAP measures are useful to investors for the purpose of financial analysis. Management uses the non-GAAP measures internally to evaluate its in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company’s core operating results. In addition, the measures are used to plan for the Company’s future periods. However, non-GAAP measures are neither stated in accordance with, nor are they a substitute for, GAAP measures.

In the second quarter of 2010, the Company announced:

  • PMC’s second-generation SRCv family of 6Gb/s SAS RAID-on-Chip controllers, including the industry’s first 24-port RoC—which enables the highest levels of server performance and connectivity—along with an eight-port RoC targeted at the volume x86 server market. Both SRCv devices are based on PMC’s proven RoCstar™ architecture and multi-core processor subsystem, more than double the IOPS and throughput performance of existing solutions, and fully leverage PCI Express® 3.0. The devices are SAS 2.1 compliant and consume 30 percent less power than comparable solutions.
  • PMC’s first multi-core, multi-threaded RAID adapter for Solid State Disk storage in x86 servers. PMC’s maxRAID BR5225-80 adapter connects PCI Express® (PCIe®) 2.0 to eight SAS/SATA ports at up to 6 Gb/s and targets data-intensive applications requiring high IOPS and throughput. Our storage platform is also the industry’s first PCIe solution to comply with the Storage Networking Industry Association’s Storage Management Initiative Specification version 1.4.
  • Industry’s first pluggable GPON ONT reference design that connects any Customer Premises Equipment equipped with a standard Small Form-Factor Pluggable port to a high-speed Passive Optical Network. This eliminates the requirement for a separate, stand-alone ONT box and enables carriers and service providers to quickly and cost-effectively introduce advanced fiber-based services.
  • Tecom, a broadband equipment maker based in Taiwan, selected PMC’s GPON SoC for its Mini GPON Gigabit ONT targeted at residential and SOHO deployments that require maximum performance, high quality of service and small form factors.
  • PMC received the prestigious Quality Excellence Award from Huawei Technology, one of China’s leading telecommunications equipment companies. The award recognizes PMC’s superior product quality, technical support and product delivery. The Company’s HyPHY 20G was also a recipient of NGN Magazine’s Technology Leadership Award in the Network Technology Category.

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