Metalink Posts Q1 Results

Chip vendor reports Q1 revenues of $5.7M and losses of $5.3M, or 27 cents per share, and probably will miss target of $30M revenues for 2005

April 27, 2005

3 Min Read

YAKUM, ISRAEL -- Metalink Ltd. (NASDAQ: MTLK), a global provider and developer of high performance wireline and wireless broadband communication silicon solutions, today announced results for the first quarter ended March 31, 2005.

For the first quarter ended March 31, 2005, revenues were $3.0 million compared to $5.7 million for the fourth quarter of 2004 and $5.3 million for the first quarter of 2004. Net loss for the first quarter of 2005 was $(5.3) million, or $(0.27) per share, compared to $(3.7) million, or $(0.19) per share, for the fourth quarter of 2004 and $(2.8) million, or $(0.15) per share, for the first quarter of 2004. Metalink’s cash, cash equivalents, short and long-term investments at the end of the first quarter of 2005 were $46.6 million.

Revenues for the quarter are in line with the revised guidance provided on April 4, 2005. First quarter revenues reflect stable demand for symmetric DSL legacy product lines in Europe, and a decline in VDSL revenues mainly due to push-out of orders in Asia-Pacific. The increase in operating expenses for the quarter derives primarily from non-recurring expenses of approximately $600,000 related to employee expenses and the consolidation of research and development activities. This consolidation process is expected to result in savings to the Company in the second half of 2005 and beyond.

Despite the shortfall in VDSL revenues during the first quarter, the Company believes that the fundamentals related to its VDSL business have improved. In particular, the adoption by the Japanese telecom standardization body (TTC) and the ITU of a new band plan to support 100Mbps symmetric VDSL services is a development that is favorable to Metalink and challenging to its competitors due to the fact that Metalink-based symmetric 100Mbps VDSL systems are the only products available that meet the standard’s performance requirements. The Metalink-based VDSL systems offered by top-tier Japanese equipment providers are currently in advanced evaluation stages by the leading Japanese operators, demonstrating unprecedented performance of symmetric 100Mbps at a reach exceeding 200 meters.

In parallel to its VDSL developments, Metalink has continued to make significant progress with its WLANPlus™ program. During the quarter, Metalink initiated an Alpha relationship with a leading equipment vendor for the development of a Multi-Room Video over Wireless Set-Top Box and Personal-Video-Recorder equipment. In addition, the Company expects to announce the availability of its first wireless LAN product during the second quarter of 2005.

Commenting on the results, Metalink’s Chairman and CEO, Tzvika Shukhman, said, “Although we experienced a push-out of orders during the quarter that was the main cause for our decline in revenues, our market positioning in Japan continues to strengthen. The band plan decision adopted by the Japanese standardization body has given us a unique window of opportunity as the only provider whose chipsets are currently designed in VDSL systems adhering to the required transmission capabilities.”

Mr. Shukhman continued, “While we are encouraged by this significant long- term growth opportunity, it remains difficult to quantify the impact that Japan will make on our 2005 revenues. Consequently, considering the shortfall in our first quarter revenues, it will be a greater challenge to meet our guidance of approximately $30 million revenues for 2005.”

Metalink Ltd.

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