First quarter revenue increases 28% from prior year period
Net revenue in the first quarter of 2007 was $67.3 million, an increase of 28 percent from $52.7 million reported in the first quarter of 2006. Gross margin in the first quarter of 2007 was 54.6 percent, as compared to 55.2 percent in the first quarter of 2006.
Net income for the first quarter of 2007 was $2.8 million, or $0.05 per diluted share, based on 56.3 million weighted average shares outstanding. This compares with net loss of $11.0 million, or $0.22 per diluted share, based on 50.2 million weighted average shares outstanding in the first quarter of 2006. The increase in net income for the first quarter of 2007 as compared to the first quarter of 2006 is primarily attributable to a one-time charge related to acquired in-process research and development associated with the acquisition of TrueSpan during the first quarter of 2006, with no similar charge during the first quarter of 2007.
SiRF reports net income (loss) and basic and diluted net income (loss) per share in accordance with GAAP and additionally on a non-GAAP basis. Non-GAAP net income, where applicable, excludes the effect of amortization of acquisition-related intangible assets, employee stock compensation expense, acquired in-process research and development, and expenses related to acquisition-related contingent payments. Non-GAAP net income for the first quarter of 2007 was $12.0 million, or $0.21 per diluted share, as compared to non-GAAP net income of $8.7 million, or $0.17 per diluted share for the first quarter of 2006. Non-GAAP net income for the first quarter of 2007 excludes $1.1 million in amortization of acquisition-related intangibles, $7.3 million in employee stock compensation expense, and $0.8 million of expenses related to acquisition-related contingent payments. Non-GAAP net income for the first quarter of 2006 excludes $1.3 million in amortization of acquisition- related intangibles, $4.7 million in employee stock compensation expense, $0.4 million in expenses related to acquisition-related contingent payments and $13.3 million of charges recorded for acquired in-process research and development. Weighted average shares outstanding used in computing diluted non-GAAP net income per share for the first quarter of 2007 were 56.3 million, compared to 50.2 million for the first quarter of 2006. Refer to the itemized reconciliation between net income on a GAAP basis and non-GAAP basis for the first quarter of 2007 and 2006 below.
Total cash, cash equivalents and short-term investments were $187.5 million at March 31, 2007, compared with $170.2 million at December 31, 2006. Long-term investments were $7.0 million at March 31, 2007, compared with $26.4 million at December 31, 2006.
"I am pleased with our Q1 results. We recorded strong financial performance in a seasonally weak quarter while strengthening our market leadership across our expanding customer base in a tough competitive environment," said Dr. Michael Canning, President and CEO.
Q1'2007 Highlights and Business Outlook:
We believe that our position in the wireless market was significantly strengthened through launches of new products and alliances. SiRF and our customers made a number of announcements at the 3GSM World Congress and CTIA to drive the momentum for location technology to mainstream wireless users worldwide. These included:
-- RIM launched BlackBerry 8800 with integrated GPS, based on the SiRFstarIII architecture. Many leading operators worldwide have already launched this platform, including AT&T in the U.S., Orange Vodafone, O2 and T- Mobile in multiple European countries, and Rogers Wireless in Canada;
-- A number of our customers including Mitac, Asus, ETEN, Amoi, Simcomm and Hisys launched new phones with integrated GPS based on the SiRFstarIII architecture;
-- We announced an agreement with Motorola to collaborate on facilitating the development of Location-Enabled Services through Unified Common APIs and Standards. As a result of this collaboration, location-based applications developed using SiRF's SiRFstudio platform will work on devices incorporating Motorola's new Location Services Framework and vice versa;
-- We launched our first 90 nm RFCMOS single die SiRFstarIII product, the GSD3t. A Multimode Aided-GPS Satellite Signal Processor, in an extremely small-footprint, GSD3t brings industry leading SiRFstarIII GPS performance to price-conscious and space-constrained mobile devices, such as cell phones. Available in an extremely small package, the GSD3t combines radio frequency, as well as analog and signal processing functionalities in a single 90 nm RFCMOS die;
-- We announced our first implementation of wireless hybrid location technology in our Multimode Location Platform through our alliance with Skyhook Wireless. Our platform can now deliver GPS-WiFi hybrid positioning to accelerate deployment of some location-based services;
-- An alliance with Openwave Systems Inc., a leading provider of software products and services for the communications industry, to integrate Openwave's Location Manager with SiRF's SiRFLoc Multimode location server, which Openwave has licensed and will resell globally;
-- A collaboration with NXP Semiconductors, the newly independent semiconductor company founded by Philips, to speed the development of cost- effective, location-aware 3G wireless handsets. The collaboration will provide global handset manufacturers with leading Assisted-GPS-compliant, integrated reference designs based upon NXP's Nexperia cellular system solution for 3G with SiRFstarIII assisted-GPS (A-GPS) and SiRFLoc(R) technologies; and
-- Achieved a key milestone towards interoperability under Secure User Plane for Location (SUPL) protocol, through the successful completion of A-GPS interoperability testing in London on a commercial GPRS/WCDMA network with NEC. The comprehensive testing covered the SUPL protocol, as well as network connectivity, and used mobile phones incorporating SiRF's SUPL version 1.0 compliant SiRFstarIII A-GPS chipset and NEC's SUPL compliant location- information system.
The portable navigation device (PND) market continues to show momentum with existing suppliers broadening their product lines and many new players entering the market. We continue to build on our market leadership position and have expanded our customer base by winning most of these new designs at existing customers, as well as at new entrants. At the CES and CeBit shows, many of our customers launched new products including:
-- Mitac launched a range of new PNDs based on the SiRFstarIII architecture;
-- Garmin launched a range of new PNDs based on the SiRFstarIII architecture;
-- Magellan launched their new Maestro series of products based on the SiRFstarIII architecture;
-- LG launched a range of PNDs based on the SiRFstarIII architecture;
-- Pioneer launched a successor to Pioneer's AVIC-S1 based on the SiRFstarIII architecture;
-- ViaMichelin, part of the French Michelin group, released two new PNDs, based on the SiRFstarIII architecture, at CeBit;
-- Navigon, a leading provider of navigation software, launched two models of its own consumer brand navigation products at CeBit based on the SiRFstarIII architecture. These products will be sold in both Europe and US markets;
-- Falk Marco Polo Interactive, a part of MAIRDUMONT, one of the European market leaders for travel media and leisure media, launched three new PND series at CeBIT;
-- The Pocket LOOX N100, an extremely small and thin SiRFstarIII based PND, co-developed by Fujitsu Siemens Computers and Navigon was launched in the US market at CES;
-- Uniden America, a leading manufacturer of wireless consumer electronics, entered the PND market with the launch of two models based on SiRFstarIII architecture; and
-- Many of our other customers, including Globalsat, Lite-On, Fortuna, Supa and Leadtek have also launched new PND platforms based on the SiRFstarIII architecture.
We are also starting to see acceleration of our SiRFstarIII design win activities in the consumer and mobile compute segments. During this quarter many customers launched a range of innovative products within this segment:
-- ASUSTeK Computers selected SiRFstarIII to drive the industry's first Ultra-Mobile PC with integrated GPS in their newly released ASUS R2H Ultra- Mobile PC;