Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, today reported financial results for the first quarter of fiscal 2007, which ended July 30, 2006.
- Q1-2007 revenue of $19.5M (up 3% quarter-over-quarter; up 7% compared to Q1-2006)
- Pro forma earnings of $2.0M (down 24% quarter-over-quarter, up 9% compared to Q1-2006)
- Pro forma diluted earnings per share of $0.10 (down from $0.13 in Q4-2006; up from $0.09 in Q1-2006)
- GAAP loss for Q1-2007 of $0.7M or $0.03 per diluted share (down from GAAP earnings of $6.8M or $0.35 in Q4-2006; down from GAAP earnings of $1.0M or $0.05 in Q1-2006)
“Tundra ended the first quarter of 2007 with 3% quarter over quarter growth and an increase in revenue of 7% over a year ago, despite a temporary softness in the communications infrastructure market during a traditionally slower part of the year,” said Jim Roche, President and CEO of Tundra. “Our business remains strong and profitable. Our Alliance and Silicon Logic Engineering (SLE) acquisitions both performed within the guidance range for Q1-2007, with Alliance contributing revenue of $1.9M for the full quarter and SLE contributing $1.5M over the last two months of the quarter. Our outlook for Q2-2007 is strong – we anticipate continued positive contributions from our acquisitions as well as continued growth in all regions. This growth will be facilitated by our global expansion, specifically with new offices in Asia-Pacific and our agreements with Atmel and Avnet to expand our reach to sell into the high-performance communications, embedded computing, industrial automation and military markets. I am confident that our strategy is sound and that we can expect continued growth in the future.”
“In the past quarter, Tundra delivered pro forma diluted earnings within the range of our guidance despite lower than expected revenues and gross margins,” said Norm Paquette, Chief Financial Officer of Tundra. “This positive performance resulted from continued financial controls, a reduced tax rate, and lower headcount due to longer than expected recruiting cycles. We believe the combination of our products, customer and partner relationships, and global presence points to continued growth for the Company.”
GUIDANCE FOR Q2-2007:
- Revenue will grow to between $21.0M and $23.0M
- Pro forma diluted earnings per share will be in the range of $0.09 to $0.12
- Gross margins will be in the mid-sixties
“We anticipate that Q2-2007 will be a strong quarter based on positive market activity and the strength of Tundra’s product portfolio. This is reflected in our guidance, which shows an increase in revenue of between 7% and 17%,” added Mr. Paquette.
PRODUCT AND MARKET LEADERSHIP
Leadership in Serial RapidIO(R)
Tundra continues to expand its portfolio of market leading Serial RapidIO switches. Complementing its May announcement of the Tsi574(TM) switch targeting DSP-intensive processing applications, Tundra launched the Tsi576(TM) switch for DSP-based wireless, networking and video applications in July. The Tsi576 expands the Company’s high-performance RapidIO switch portfolio targeted for a wide variety of DSP-based applications such as wireless base stations, media gateways, video infrastructure and image processing. Tundra’s combined product line of high-performance serial RapidIO products provides customers with a wide selection of features and configurability to meet their specific design needs.
Also in this quarter, Tundra announced that RIOLAB(TM), the world’s first RapidIO interoperability lab, commenced full operations on schedule, and started accepting reservations for test sessions from vendors and OEMs involved in RapidIO-based product development. To facilitate access to RIOLAB, an inclusive and easy-to-navigate web site, www.rio-lab.com, also was introduced. Launched by Tundra Semiconductor in February 2006 as evidence of Tundra’s ongoing commitment to the RapidIO standard, RIOLAB is a state-of-the-art testing facility that provides the RapidIO ecosystem with device interoperability and specification compliance testing.
Executing on its strategy to meet customer needs across markets and geographies, Tundra announced an agreement licensing Atmel Corporation to deliver a selection of Tundra’s portfolio of high-performance interconnect devices with enhanced capabilities for applications requiring extended-temperature and extended-reliability specifications. As a result, Tundra and Atmel-Grenoble will offer comprehensive processing systems solutions in the high-performance telecommunications, embedded computing, industrial, military and space markets. Atmel will be able to offer host bridges for PowerPC(R) and RapidIO interconnect products as either commercial devices upscreened to meet extended-reliability demands, such as high temperature range, burn-in or other specific qualifications, or as high reliability devices assembled and tested by Atmel to military screening levels such as MIL-PRF 38535.
Recently, Tundra signed Avnet Electronics Marketing Americas as a value-added distributor in North America, expanding Tundra’s product and support delivery to customers in the region. Avnet will promote, supply and support Tundra products to address the growing demand from communications, networking, storage, and information technology leaders for Tundra’s System Interconnect products.
In addition, Tundra took significant steps to support its growing customer base in the Asia-Pacific region, and more specifically within China, by opening new offices in Shenzhen and in Shanghai. Tundra is well-established in the region with growing demand from key communications, networking, storage, and information technology leaders for its RapidIO, PCI, PCI-X and VME System Interconnect products. The Company plans to continue to execute its Asia-Pacific growth strategy by adding offices in Taiwan and South Korea to enhance its sales, support and design-in expertise in the region. This, combined with an expanded sales team in the European Union and North America, effectively supports its customers’ competitiveness in the global marketplace.
CONFERENCE CALL AND WEBCAST
Tundra management will be holding a conference call today, August 28, 2006 at 5:15 p.m. EST to discuss additional details regarding this earnings update. You may access the conference call via any of the following:
Replay: 416-640-1917, Passcode: 21198418#. The replay will be available through September 5, 2006.
Tundra Semiconductor Corporation (TSX:TUN) is the global leader in System Interconnect providing world-class customer and technical support, leading-edge semiconductor solutions and design services to the world’s foremost communications, networking, storage system, and information technology vendors. Consistently delivering on system level performance promises that reduce time to market, Tundra System Interconnect products ensure market advantage in wireless infrastructure, storage networking, network access, military, industrial automation, and information technology applications. Silicon Logic Engineering, Inc. (SLE), Tundra’s semiconductor design services division, offers industry-leading ASIC design services, semiconductor intellectual property and product development consulting.
The difference between pro forma and GAAP earnings is due to stock-based compensation expense, goodwill impairment charges and amortization of intangibles and backlog associated with Tundra’s acquisitions. Tundra uses pro forma measures internally to evaluate and manage operating performance as well as to forecast and plan.
Tundra Semiconductor Corporation is a public company with common shares listed for trading on the Toronto Stock Exchange (TSX:TUN) in Canada. All figures, unless otherwise noted, are stated in Canadian dollars in accordance with accounting principles generally accepted in Canada.
The Company cautions that the forward-looking information in this release is based on certain assumptions made by the Company that may prove to be inaccurate. Assumptions made include customer demand for the Company’s products and services, the Company’s ability to maintain and enhance existing customer relationships, as well as the Company’s ability to bring to market the products currently under development.
Furthermore, the Company cautions that the forward-looking statements in this release are based on current expectations that are subject to risks and uncertainties. Actual results may differ due to factors such as customer demand, customer relationships, new product development, new services offerings, product shipping schedules, product mix, competitive products and services, pricing pressure, and changes in the embedded systems market specifically. Additional information identifying risks and uncertainties is contained in the Company’s filings with the various provincial securities commissions.
TUNDRA is a registered trademark of Tundra Semiconductor Corporation (Canada, U.S. and U.K.). TUNDRA and the Tundra logo are registered marks of Tundra Semiconductor Corporation in Canada, European Union and People’s Republic of China (registration is pending in the United States). Tsi574, Tsi576 and Design.Connect.Go are trademarks of Tundra Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade Association, Inc. RIOLAB is a trademark of RIOLAB Corporation (Canada, U.S. and U.K.). The PowerPC name is a trademark of International Business Machines Corporation, used under license therefrom.