NetLogic Posts Q2

Revenues were $18.7M, up 57.5% from last year's Q2, for net income of $2.4M ($0.13/share), down from a net loss of $2.9M ($0.78/share)

July 27, 2005

3 Min Read

MOUNTAIN VIEW, Calif. -- NetLogic Microsystems, Inc. (Nasdaq:NETL), the leader in the design and development of knowledge-based processors, today announced financial results for the second quarter ended June 30, 2005.

Revenue in the second quarter of 2005 was $18.7 million, up 57.5 percent from the second quarter of 2004. Greater demand for knowledge-based processors and growth in the company's total addressable market led to the stronger-than-expected second quarter revenue. In the first quarter, the company announced revenue that was especially strong at $21.8 million, impacted by a one-time event and a customer pull-in. Revenue in the fourth quarter of 2004 was $15.2 million.

The stronger-than-expected revenue and gross margins helped drive second quarter net income. Second quarter net income, in accordance with generally accepted accounting principles (GAAP), was $2.4 million or $0.13 per share, compared with $5.4 million or $0.29 per share in the first quarter of 2005, and a net loss of $75,000 or $0.00 per share in the fourth quarter of 2004. Net loss in the second quarter a year ago was $2.9 million or a loss of $0.78 per share.

Pro forma net income, which excludes amortization of stock-based compensation, was $2.9 million or $0.15 per share in the second quarter of 2005, compared with pro forma net income of $6.1 million or $0.33 per share in the first quarter of 2005, and $820,000 or $0.05 per share in the fourth quarter of 2004. Pro forma net loss in the second quarter a year ago was $741,000 or a loss of $0.20 per share.

The company believes the additional non-GAAP measures provided are useful to investors for performing financial analysis because they highlight the company's operating activities. The company's management uses this pro forma measure internally to evaluate its operating performance and plan for its future periods. However, pro forma measures are not a substitute for GAAP measures. For a reconciliation of GAAP versus pro forma financial information on a quarterly basis, please see the attached schedule.

Gross margins in the second quarter of 2005 continued to be strong at 56.1 percent, driven by continued yield improvements and a shift in product mix toward the company's lower-cost Version 4 knowledge-based processors. First quarter gross margins were 56.5 percent, but included a contribution of 4.4 percent from the sale of products that had been written off in prior periods, and accordingly had no associated cost of revenue. Second quarter gross margins included no contribution from previously written-off inventory.

"NetLogic Microsystems had another excellent quarter, as we accelerated first production deliveries of our NL6000 knowledge-based processors, sampled the second product in our family of NETLite(TM) processors and earned new design wins in both product categories," said Ron Jankov, president and CEO.

"The market for our products continues to show strong growth in 2005, driven by increasing demand for 10 Gigabit Ethernet (10GbE) and advanced network functionality. The increase in the number of devices accessing the Internet, including 3G cell phones, MP3 music players and wireless computers, and the increased usage of applications such as VoIP and streaming audio and video, is placing greater demand on network infrastructure. The increased need for advanced security and support for Internet Protocol standard version 6 (IPv6) are also becoming more pervasive in our customers' products. All of these trends increase the amount of processing that is required at each node of the network and continue to drive the growth of our business."

NetLogic Microsystems Inc.

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