Tundra Semiconductor Reports Revenue of $22 Million for Recent Quarter

Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, reported financial results for the second quarter of fiscal year 2007, which ended October 29, 2006.

  • Q2 Revenue: $22.0 million
  • Q2 Pro forma earnings: $2.4 million
  • Q2 Pro forma diluted earnings per share: $0.12
  • Q2 GAAP Results: a loss of $0.2 million or $0.01 per diluted share

Revenue for the second quarter of fiscal year 2007 was $22.0 million, a 13% increase over the previous quarter, and an 18% increase over the same quarter in fiscal year 2006. Pro forma earnings of $2.4 million represent a 21% increase, quarter-over-quarter and a 7% increase compared to the second quarter of fiscal year 2006. Pro forma diluted earnings per share of $0.12 exceeded the Company’s revised per share earnings guidance for the quarter of $0.05 to $0.08. The stronger than expected earnings performance can be attributed to: cost control, higher gross margins, and development expense delays. GAAP results for the quarter was a loss of $0.2 million or $0.01 per diluted share, down from a loss of $0.7 million or $0.03 per diluted share in the previous quarter and down from earnings of $1.4 million or $0.07 compared to second quarter fiscal year 2006.

“Despite volatility in the industry, I am pleased with the solid revenue and earnings performance we achieved in the quarter. In addition to expanding our PCI product portfolio, we also shipped the first production orders for our RapidIO products,” said Daniel Hoste, President and Chief Executive Officer, Tundra Semiconductor. “We are increasingly seeing RapidIO being adopted and realized in high bandwidth applications such as wireless and wireline infrastructure. Our estimates indicate that the total available market in calendar year 2009 is approximately $130 million USD for RapidIO. Our RapidIO portfolio is a key element of our future growth strategy.”

Management offers the following outlook for the third quarter of fiscal year 2007:

  • Q3 Revenue is expected to be in the range of $20.0 million and $23.0 million
  • Q3 Pro forma diluted earnings per share is expected to be in the range of $0.11 to $0.15

“In our third quarter guidance, we have broadened the expected range of revenue and earnings per share performance to reflect the increased uncertainty we are seeing in the communications end markets that some of our products serve,” said Hoste.

Under new executive management, Tundra has launched three initiatives to strengthen its System Interconnect leadership position. First, the sales and marketing organizations will be reinforced and refocused to maximize every opportunity and to respond to the changing landscape of customers requirements. Second, with a more focused market driven strategy, Tundra will pursue a new portfolio of Smart Interconnect Solutions, while sustaining investment in both RapidIO and PCI. Finally, structural organizational changes will be implemented as required to align Tundra’s global teams with the new business strategy.

Q2 FY2007 Highlights:

  • Tundra strengthened its management team:
    • Daniel Hoste, formerly Vice President Products, appointed President and Chief Executive Officer
    • David Long, formerly with Cognos, appointed Chief Financial Officer
    • Robert Fischer, formerly Director North American Sales, appointed Vice President Worldwide Sales
  • Tundra launched the Tsi350(TM) PCI-to-PCI Bridge, an industry standard, low power 32-bit 66 MHz bridge. Competitively priced, the Tsi350 is ideally suited for a wide range of communications and networking applications and will begin sampling in January 2007.
  • Tundra announced the availability of the Tundra Tsi578(TM) Serial RapidIO Development Platform which gives designers the ability to rapidly prototype and test interoperability of RapidIO-based systems. The development platform uses the Tsi578 switch which has multicast capability, essential for DSP aggregation that supports a wide range of applications such as wireless base stations, media gateways, video infrastructure and DSP-intensive image processing.
  • Tundra announced a distribution agreement with Nu Horizons Electronics Asia. Under the agreement, Nu Horizons Asia will promote, distribute and support Tundra’s full range of System Interconnect products throughout the Asia Pacific region, with the exception of Japan. The partnership is highly complementary as combines Tundra’s broad System Interconnect portfolio with Nu Horizons’ leading distribution capability for advanced technology active components, system solutions, and multiple product lines.
  • Tundra and e2V Semiconductors announced that e2v extended its processor offering by launching the PC109(TM) Host Processor Bridge, the extended-reliability version of the Tundra Tsi109 Host Bridge for military and aerospace applications.
  • Tundra announced Emerson Network Power implemented the Tundra Tsi568(TM) Serial RapidIO Switch into the Fat Pipe switch module in its new 12-slot MicroTCA(TM) development system.
  • Tundra announced that GE Fanuc Embedded Systems incorporated the Tundra Tsi109(TM) Host Bridge into its new Telum TSPE01 processor Advanced Mezzanine Card (AdvancedMC(R)).

Conference Call and Webcast
Management will held a conference call and webcast on Thursday, November 30, 2006 at 5:00 pm EST. The conference call is archived on Tundra’s website. Replay of the conference call will be available until midnight December 7, 2006. To access the replay, please dial 1.416.640.1917 and enter passcode 21210539#.

The difference between pro forma and GAAP earnings is due to stock-based compensation expense, goodwill impairment charges and amortization of intangibles and other assets 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.

About Tundra
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 and FPGA design services, semiconductor intellectual property and product development consulting.

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). Tsi350, Tsi568, Tsi578, Tsi109 and Design.Connect.Go are trademarks of Tundra Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade Association, Inc.