Analyst Conference Summary

conference date: August 2, 2007 @ 2:00 PM PT
for quarter ending: June 30, 2007 (4th fiscal quarter 2007)

Forward-looking statements

Overview: After taking 14-week quarter into account, revenues were up just 3% and were down from year-earlier. Still mired in accounting restatement land, so no GAAP details are available.

Basic data:

Revenues were $531.1 million, up 11.6% sequentially from $475.8 million, and up 4.0% from $510.6 million year-earlier. However, that is for a 14-week quarter, with 13-week comparisons. On an equivalent basis sequential increase would have been up 3%.

No net income or EPS data is available.

Cash, equivalents and short term investments ended at $1.3 billion, down $24.9 million sequentially.

Guidance:

Fiscal Q1 revenues between $510 million and $530 million. Gross margin to be flat sequentially.

Conference Highlights:

Full fiscal year revenues were $2 billion, up 8% from $1.86 billion in fiscal 2006. But fiscal 2007 had 53 weeks. Adjusted for that, revenues were up 5.5% for the year.

Dividend was increased by 20% to $0.1875 per share.

Completion of restatement process is 3 to 6 months away.

Excluding charges gross margins improved by 0.9% over fiscal Q3 due to lower inventory reserves.

Japan-based manufacturing partnership with Seiko-Epson earlier. As a result decided to idle some capacity in San Jose. One-time asset impairment and accelerated depreciation charges resulted of $23.3 million in Q4, with further $8.4 million in Q1 2008 and $2.6 million in Q2 of fiscal 2008 expected. San Jose fab will continue to produce wafers at lower rate.

Operating expenses increased 7.7% sequentially mainly due to additional week in quarter.

Cash usage in quarter included $50 million for dividends, $143.3 million for property and equipment, and $49.5 million for income tax.

Accounts receivable decreased $6.7 million sequentially to $244 million. Inventory increased modestly and is within our guidelines. Inventory in distribution channels declined.

Additions to property, plant, and equipment were $119.6 million. This level of capital spending was a conscious decision to expand capacity and reduce cycle times. Fiscal capital spending will moderate, with $81 million expected for Q1.

Net realizable bookings in Q4 were $540 million, up 16.6% from Q3. Beginning backlog is $350 million, sequentially flat.

Industrial, communications, and computing end markets were up sequentially. Consumer segment was down. But now consumer ordering is in full swing.

Believes served market will grow 12% annually for next three years. 12% is from combined organic growth and move into new product areas. ERP vendor selected.

Design wins included one for a thin cell phone speaker driver for a major manufacturer. Introduced first 2.5 gigahertz Wi-Fi transceiver. Power supply win for server manufacturer. Consumer electronics in auto USB sockets win. MP3 PMIC (power management) win with Japanese manufacturer.

Q&A:

Long term operating model? Gross margin in low 60s (non-GAAP) with 13% per year revenue growth.

Q1 guidance to comparable (13 week) 5% midpoint? Order rate so far indicates we can achieve this. Believe this will be driven by consumer upswing. Consumer bookings were strong in first month of current quarter.

Operating expenses grew at 7.7% sequentially. No data for operating margin.

Inventory write down reserve? Did go down some in quarter, a chance it will go down again.

Lead times? Did decrease by about .3 weeks to about what our customers are requesting from us on average.

Which is more important to you, margins or revenue growth? What is important is profit growth, which is a relationship between the two.

We do have some low margin products in our mix because we do not want to damage key customer relationships.

Restatement expenses? Lawsuit plus restatement costs last quarter were about $11 million. Reasonable assumption this rate will continue until restatement completion.

Analyst day will not be until after the restatement is complete.

San Antonio facility underutilized? No, San Antonio is about 90% utilized. Long term 25% to 30% of capacity will be done with outsourcing.

OpenIcon Analyst Conference Summaries Main Page

Maxim Investor Relations page

Search

More Analyst Conference Pages: