SUNNYVALE, Calif., July 28 /PRNewswire-FirstCall/ -- SST (Silicon Storage Technology, Inc.) (NASDAQ: SSTI), a leader in flash memory technology, today announced results for the second quarter, ended June 30, 2009.
Net revenues for the second quarter were $58.1 million compared with $50.1 million in the first quarter of 2009 and with $83.7 million in the second quarter of 2008. Product revenues for the second quarter of 2009 were $51.8 million, compared with $38.8 million in the first quarter of 2009 and with $71.1 million in the second quarter of 2008. Revenues from technology licensing for the second quarter were $6.3 million, compared with $11.3 million in the first quarter of 2009 and with $12.6 million in the second quarter of 2008.
Loss from operations for the second quarter was $7.5 million compared with a loss from operations of $6.3 million in the first quarter of 2009 and with a loss from operations of $5.9 million in the second quarter of 2008.
SST is in the process of completing an evaluation of a potential impairment charge during the second quarter related to its investment in Grace Semiconductor Manufacturing Corporation, ("GSMC"). SST's preliminary net loss for the second quarter of 2009, before any such potential impairment charge, if any, was $8.2 million, or $0.09 per share, based on approximately 95.8 million diluted shares. If SST is required to further impair its investment in GSMC, its net loss will increase; however, SST cannot at this time estimate the potential range of any such impairment charge, if any. In the first quarter of 2009, the company recorded a net loss of $9.2 million, or $0.10 per share, based on approximately 95.7 million diluted shares. For the second quarter of 2008, SST reported net loss of $9.6 million, or $0.09 per share based on approximately 101.8 million diluted shares.
SST finished the second quarter of 2009 with $131.3 million in cash, cash equivalents, short-term investments, and long-term marketable debt securities, up approximately $5.6 million from $125.7 million at March 31, 2009.
Management Qualitative Comments
"After hitting bottom during the month of January, our product shipments rebounded and the momentum continued into the second quarter," said Bing Yeh, chief executive officer. "The inventory replenishment by our customers, coupled with modest improvement in demand, accounted for our better-than-expected product revenues in the second quarter. Licensing revenue in the second quarter reflected the declines in our licensees' business and is expected to rebound somewhat in the third quarter. Market conditions remain challenging in the memory space as there continues to be uncertainty over the macro-economic environment resulting in poor visibility and continued pricing pressure. We continue to experience ASP declines, particularly in commodity memory, causing pressure on our gross margins. Modest growth in revenues is expected with ASP erosion significantly offsetting unit volume increases. Given these difficult conditions, SST continues to place emphasis on cost-control as well as inventory and cash management. Further, we are focusing our resources on areas of our business that will yield the most impact over time, creating additional opportunity without additional R&D expense. We are taking a fresh look at every aspect of our business and are working hard on our goal of returning our company to profitability."
Third Quarter 2009 Outlook
SST expects its third quarter revenues to be between $61 million and $68 million. Gross margin is expected to be between 25 and 29 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $22 million and $24 million. Net loss per share is expected to be between $0.07 and $0.03.
Conference Call Dial-in Information
SST will hold a conference call to discuss its financial results today at 1:30 p.m. PT. Those wishing to participate in the conference call should dial (800) 230-1092, international participants please dial (612) 332-0228, using the password "SST" at approximately 1:20 p.m. PT. A replay of the call will be available for one week by dialing (800) 475-6701, international participants dial (320) 365-3844, using the access code 107119. A webcast replay of the conference call will be available until the company's conference call for its third quarter financial results on the company's Web site at http://www.sst.com/events.
About Silicon Storage Technology, Inc.
Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of memory and non-memory products for high volume applications in the digital consumer, networking, wireless communications and Internet computing markets. Leveraging its proprietary, patented SuperFlash technology, SST is a leading provider of nonvolatile memory solutions with product families that include various densities of high functionality flash memory components and flash mass storage products. The company also offers its SuperFlash technology for embedded applications through its broad network of world-class manufacturing partners and technology licensees, including TSMC, which offers it under its trademark Emb-FLASH. SST's non-memory products include NAND controller-based products, smart card ICs and modules, flash microcontrollers and radio frequency ICs and modules. Further information on SST can be found on the company's Web site at http://www.sst.com.
Forward-Looking Statements
Except for the historical information contained herein, this news release contains forward-looking statements regarding memory and non-memory market conditions, SST's future financial performance, including a potential impairment charge related to SST's investment in GSMC, the ability to control expenses, manage inventory and generate cash, the launch, design cycle and performance of new products, SST's licensing business, SST's ability to diversify its business, the transition of SST's products to smaller geometrics, and SST's ability to bring new products to market, all of which involve risks and uncertainties. These risks may include timely development, acceptance and pricing of new products, the terms, conditions and revenue recognition issues associated with licensees' royalty payments, the impact of competitive products and pricing, and general economic conditions as they affect SST's customers, as well as other risks detailed from time to time in the company's periodic reports, including the Annual Report on Form 10-K for the year ended December 31, 2008, Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and other reports filed from time to time with the Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, SST disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
For more information about SST and the company's comprehensive list of product offerings, please call 1-888/SST-CHIP. Information can also be requested via email to Email Contact or through SST's Web site at www.sst.com SST's head office is located at 1171 Sonora Court, Sunnyvale, Calif.; telephone: 408/735-9110; fax: 408/735-9036.
The SST logo and SuperFlash are registered trademarks of Silicon Storage Technology, Inc. All other trademarks or registered trademarks are the property of their respective holders.
-- FINANCIAL TABLES TO FOLLOW --
Silicon Storage Technology, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
--------------- --------------------
2008 2009 2008 2009
---- ---- ---- ----
Net revenues:
Product revenues $71,073 $51,766 $140,771 $90,553
Technology
licensing 12,627 6,317 24,014 17,659
------ ----- ------ ------
Total net
revenues 83,700 58,083 164,785 108,212
Cost of revenues 59,751 44,574 115,127 79,109
------ ------ ------- ------
Gross profit 23,949 13,509 49,658 29,103
------ ------ ------ ------
Operating expenses:
Research and
development 15,223 11,250 30,835 22,664
Sales and
marketing 6,918 5,166 14,401 10,126
General and
administrative 7,721 4,636 14,904 9,796
Other - - - 329
------ ------ ------ ------
Total operating
expenses 29,862 21,052 60,140 42,915
------ ------ ------ ------
Loss from operations (5,913) (7,543) (10,482) (13,812)
Other income, net 976 688 1,850 1,185
--- --- ----- -----
Loss before provision for
(benefit from) income
taxes and pro rata share
of loss from equity
investments (4,937) (6,855) (8,632) (12,627)
Provision for (benefit
from) income taxes 2,390 1,048 (4,660) 3,922
----- ----- ------ -----
Loss before pro rata share
of loss from equity
investments (7,327) (7,903) (3,972) (16,549)
Pro rata share of loss
From equity investments 2,241 254 4,137 849
----- --- ----- ---
Net loss $(9,568) $(8,157) $(8,109) $(17,398)
======= ======= ======= ========
Net loss per share -
basic and diluted $(0.09) $(0.09) $(0.08) $(0.18)
====== ====== ====== ======
Shares used in per
share calculation -
basic and diluted 101,793 95,747 102,698 95,726
======= ====== ======= ======
SST is in the process of completing an evaluation of a potential
impairment of its investment in GSMC. SST is unable to estimate the
potential range of any such charge, if any, at this time. If SST is
required to incur such a charge, SST will reflect the charge in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 to be
filed with the Securities and Exchange Commission. Any such charge will
increase SST's net loss and net loss per share.
Silicon Storage Technology, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
December 31, June 30,
2008 2009
---- ----
ASSETS
Current assets:
Cash and cash equivalents $50,880 $51,206
Short-term investments 48,997 49,664
Trade accounts receivable, net 20,117 31,421
Inventories 54,159 33,323
Other current assets 4,153 3,972
----- -----
Total current assets 178,306 169,586
Property and equipment, net 18,913 15,243
Long-term marketable equity investments 18,196 26,846
Long-term marketable debt securities 31,848 30,467
Goodwill and intangible assets, net 14,794 13,407
Other assets 26,426 26,037
------ ------
Total assets $288,483 $281,586
======== ========
LIABILITIES
Current liabilities:
Trade accounts payable $19,146 $21,660
Accrued expenses and other liabilities 14,200 11,493
Deferred revenue 3,841 2,304
----- -----
Total current liabilities 37,187 35,457
Other liabilities 8,082 10,052
----- ------
Total liabilities 45,269 45,509
------ ------
SHAREHOLDERS' EQUITY
Common stock 412,312 414,256
Accumulated other comprehensive income 14,308 22,625
Accumulated deficit (183,406) (200,804)
-------- --------
Total shareholders' equity 243,214 236,077
------- -------
Total liabilities and shareholders'
equity $288,483 $281,586
======== ========
SST is in the process of completing an evaluation of a potential
impairment of its investment in GSMC. SST is unable to estimate the
potential range of any such charge, if any, at this time. If SST is
required to incur such a charge, SST will reflect the charge in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 to be
filed with the Securities and Exchange Commission. Any such charge will
decrease the carrying value of SST's investment in GSMC and will be
reflected in other assets.
Silicon Storage Technology, Inc. and Subsidiaries
Supplemental Data
Percentage of Change in
Gross Product
Revenue Revenue
------------- -------
2Q08 to 1Q09 to
2Q08 1Q09 2Q09 2Q09 2Q09
---- ---- ---- ---- ----
Product Revenue By
Ship-To Location
North America 5% 6% 4% (48%) (14%)
Total International 95% 94% 96% (27%) 38%
Europe 7% 7% 4% (64%) (29%)
Japan 9% 7% 11% 0% 109%
Korea 4% 3% 7% 23% 214%
China and Taiwan 70% 68% 66% (30%) 3%
Other Far East 5% 9% 8% 6% 19%
Product Revenue by
Application
Digital Consumer 32% 29% 23% (50%) 11%
Internet Computing 21% 22% 21% (29%) 27%
Networking 12% 17% 15% (12%) 12%
Wireless
Communications 35% 32% 41% (16%) 85%
Total 100% 100% 100% (28%) 35%
Licensing Revenue as a
% of Total Revenue 15% 23% 11% (50%) (44%)
For More Information Contact:
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060
SOURCE Silicon Storage Technology, Inc.
Web site: http://www.sst.com/