Financial

posted on 29 July 2008 10:33

TAIPEI, Taiwan, July 29, 2008 (PRIME NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) (the "Company") today announced its second quarter 2008 financial results. Second quarter net sales increased 2% year-over-year to US$48.6 million. GAAP net income decreased 78% year-over-year to US$2.0 million, or US$0.06 per diluted ADS, compared to US$0.27 per diluted ADS in the second quarter of 2007.

Non-GAAP net income, which excludes stock-based compensation, acquisition-related charges, foreign exchange gain or loss, and one-time items, decreased 44% year-over-year to US$8.8 million, or US$0.26 per diluted ADS, compared to US$0.46 per diluted ADS in the second quarter of 2007.

<sup>Financial Highlights
* Net sales increased 2% year-over-year to US$48.6 million
* Gross margin excluding stock-based compensation declined from 2Q07 to 47.3%, mainly because of a mobile communications product mix shift from tuners to SiPs and write-offs of obsolete inventory; mobile storage product gross margins are unchanged from 1Q08
* GAAP gross margin declined to 47.1%
* Operating margin excluding stock-based compensation, acquisition- related charges, and one-time items decreased from 32.0% in 2Q07 to 17.5%
* Net income excluding stock-based compensation, acquisition- related charges, foreign exchange gain or loss, and one-time items decreased 44% year-over-year to US$8.8 million
* Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges, foreign exchange gain or loss, and one-time items were US$0.26, a 43% decrease from US$0.46 in 2Q07
* GAAP diluted earnings per ADS were US$0.06, down 78% from US$0.27 in 2Q07</sup>

^{Business Highlights}

<sup>* Total unit shipments increased 29% year-over-year and decreased 10% sequentially to approximately 101 million units
* Storage controller unit shipments increased 31% year-over-year from a strong 2Q07 and decreased 11% quarter-over-quarter from a very strong 1Q08
* SSD controller shipments increased to over 1 million units as a result of continued demand for low-cost and ultra mobile notebook PCs, as well as accelerating demand from industrial and enterprise applications
* New eMMC and eUSB embedded flash controller design-wins received from Hynix, Numonyx, and Micron and developed for tier-1 handset and GPS OEMs, as well as for enterprise applications
* New controller business signed with Intel and Samsung for their OEM USB flash drive products
* Mobile TV IC revenue increased more than 31% sequentially and approximately 130% year-over-year as we continue to scale in Korea and ship in limited quantities to Chinese handset OEMs such as ZTE and Amoisonic</sup>

Commenting on the results, Silicon Motion's President and CEO, Wallace Kou, said:

"The second quarter turned out to be an extremely challenging period for the Company. Although our overall first half of 2008 revenues are in-line with our original expectations, our second quarter sales, particularly sales of storage products, were unfavorably affected by weak demand from many of our customers, both in our retail as well as bundled card controller segments. Strength in our first quarter revenue performance was largely offset by weakness in the second quarter. Our retail card customers were negatively affected by both higher NAND flash prices during part of the second quarter, together with softening end-consumer demand, primarily in Europe and the US. Our sales to China met expectations, but were nevertheless negatively affected by the devastating earthquake in Sichuan. In the second quarter, NAND flash vendors started reducing their capacity and therefore also reduced their sales of OEM cards and procurement of controllers from us. Our handset bundled business also underperformed, but mostly because of temporary product transition issues. Handset OEMs began taking advantage of improved affordability of NAND flash late this quarter to transition from bundling lower density cards to bundling higher density cards.

"Our business also had some important positive developments. Increasingly affordable NAND flash continued to create new opportunities for us in SSDs, embedded flash, and for non-consumer applications. This quarter we won embedded flash controller business from Hynix and Numonyx for eMMC solutions designed for tier-1 global handset and GPS OEMs. We also won embedded flash controller business at Micron for an eUSB solution targeting enterprise storage applications. Importantly, we have already started shipping some of these embedded flash controllers. Our embedded flash controller for handsets are on track to ship in the fourth quarter.

"This quarter, we shipped over one million SSD controllers for ultra low cost PCs and other applications, with a big part of our sales going to the ASUS eeePC and HP Mini-Note. We also shipped increasing numbers of SSD controllers for industrial and enterprise applications. Separately, we are on track to release additional engineering samples of our recently announced series of best-in-class MLC SSD controllers in the third quarter and expect to begin production in the fourth quarter.

"Our mobile TV IC revenue increased over 31% this quarter. Our overall communications products now account for 21% of our total revenue. We continue to have the leading position in Korea, our home market for this business, and have a developing presence in China with local handset OEM customers that include ZTE and Amoisonic. We remain excited about our mobile TV business and believe we have one of the most comprehensive and competitive portfolios of mobile TV solutions, including for T-DMB, S-DMB, DVB-H, C-MMB, T-MMB, and ISDB-T standards, in the global market."

More here.

^{[Chris Mellor.]}