MEMSIC Announces Third-Quarter 2010 Results

New Product Ramp-ups Contribute to Sales Growth

ANDOVER, Mass. — (BUSINESS WIRE) — November 8, 2010 — MEMSIC, Inc. (NasdaqGM: MEMS), a leading MEMS sensing solution provider, today announced financial results for the third quarter ended September 30, 2010.

  • Revenues totaled $10.8 million compared to $7.1 million in the third quarter of 2009.
  • Gross margin was 37.8% compared to 41.3% in the 2009 quarter. Gross margin in the 2010 quarter was negatively impacted by a $0.4 million sales credit granted to a customer for estimated engineering and screening costs incurred during 2010. The credit reduced gross margin by 2.4 basis points.
  • Operating expenses rose to $6.4 million from $3.1 million in the 2009 quarter, including an increase in R&D expense to $2.4 million from $1.2 million.
  • Net loss in the 2010 third quarter was ($1.9) million, or ($0.08) per diluted share, compared to net income of $52,000, or $0.00 per diluted share, in the prior-year period.
  • EBITDA in the 2010 third quarter was ($1.0) million compared to $0.4 million in the 2009 quarter.

MEMSIC Chairman, President and CEO, Dr. Yang Zhao commented, “We again surpassed the top end of our quarterly revenue guidance, with our magnetic sensor and new series of ultra-low-cost accelerometers contributing significantly to our growth in this quarter. We are pleased that the market for smartphones is picking up worldwide and that MEMSIC is benefiting from this trend through a ramp up in sales to a major manufacturer of GPS-enabled mobile phones.

“In the near term, the continuous cost reduction of sensor products is helping us penetrate more cost-sensitive applications such as toys and games. In the long term, we expect continuous product development in integrated smart sensor and sensing systems to drive higher ASP and margin as well as revenue growth. With our Crossbow acquisition in January 2010, we significantly increased our R&D investment in next-generation multi-sensor and MCU integrated system products at both the IC level for the consumer and mobile market and the module level for the high-end industrial, automotive, and general aviation markets. Our next-generation product lines will naturally combine MEMSIC’s core competency in ultra-low-cost sensor product design and manufacturing with the core competency in multi-sensor system integration we acquired from Crossbow. One example is the high-performance MEMS inertial systems we recently introduced, which offer the superior reliability of our advanced MEMS technology for integrated navigation systems and in stabilization and control applications.”

“The transition to China of manufacturing operations for the sensor system product lines we acquired is progressing as planned. Manufacturing for all of the wireless sensing products has been transferred, and we will finish transferring our inertial navigation system and solution products by Q1 next year except for our FAA-certified product line, which takes longer due to the nature of FAA regulations. We continue to expect cost savings through the transfer process and increased product performance and functionality through redesigning most of the product lines.”

The company’s third-quarter 2010 results include revenue from the products MEMSIC acquired from Crossbow Technology, Inc. in January 2010 and costs related to the addition of Crossbow engineering and sales staff. The 2010 and the 2009 results include $0.4 million and $0.3 million, respectively, in stock-based compensation.

Outlook

For the fourth quarter of 2010, MEMSIC anticipates revenue in the range of $10.0 to $11.0 million. Net loss, including stock-based compensation of $0.4 million, is expected to be in the range of ($0.08) to ($0.11) per share. Average diluted share count for the fourth quarter is estimated to be 24 million.

Conference Call

Management will hold a conference call and webcast at 10:00 a.m. EST on November 8, 2010 to review and discuss the Company's results.

What:         MEMSIC 3Q 2010 financial results conference call and webcast
When: Monday, November 8, 2010
Time: 10:00 a.m. EST
Live Call: (877) 291-1367, domestic
(914) 495-8534, international
Replay: (800) 642-1687 pass code 16895977, domestic
(706) 645-9291, pass code 16895977, international
Webcast:

http://investor.memsic.com (live and replay)


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