Peraso Inc (PRSO) 2004 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Monolithic System Technologies third quarter 2004 earnings conference call. My name is Steven and I'll be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question and answer session toward the end of this conference. If at any time during the call you require assistance please press, star followed by zero and a coordinator will be happy to assist you. As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to Ms. Beverly Twing of Sheldon Investor Relations, please proceed.

Thank you, Steven. By now everyone should have received our press release, however, if you haven't, it is available in the investor relations section of MoSys web site at www.mosys.com. Before we begin the discussion of the third quarter results, I would like to acquaint you with our Safe Harbor statement. The discussion during this conference call will contain forward-looking statements within the meaning of the private securities litigation reform act of 1995 which includes without limitation statements about the market for the MoSys technologies, benefits, and performance expected from use of the 1TSRAM technologies, licensees of 1TSRAM technologies and their strategy. The development and production of products that use MoSys license technology. License fees and royalties attributable to 1TSRAM technology, and the companies anticipated or prospective financial performance. Any forward-looking statements made during this call are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information concerning factors that could cause actual results to differ materially from any forward-looking statements made during this call, are contained in the company's most recent annual report on form 10-K filed with the securities and exchange commission in particular in the section titled risk factors in the form 10-K and in other reports that the company files from time to time with the securities and exchange commission. MoSys undertakes no obligation to publically update any forward-looking statement for any reason except as required by law even if new information becomes available or other events occur in the future. Thank you for your attention. I would now like to turn the call over to Dr. Fu-Chieh Hsu, President and CEO of MoSys. Fu-Chieh?

Good afternoon, everyone. And welcome to the MoSys third quarter earnings conference call. With me today are Mark Voll, CFO and Karen Lamar, VP of sales and marketing. We will begin the call with Mark presenting a brief overview of the financial results for the third quarter of 2004. After which I will discuss business and technology highlights of the third quarter and we will have Karen provide a brief overview of our customers and markets. Finally, we will conclude by answering any questions you may have. Now I will turn the call over to Mark.

Thank you, Fu-Chieh. Good afternoon, everyone. Today we reported financial results for the third quarter ended September 30th, 2004. Here are the summary of those results. Net revenue in the third quarter was 1.7 million. Total net revenue included licensing revenue of 128,000. Royalty revenue of 1.5 million, and product revenue of 76,000. Licensing revenue in the third quarter was 128,000 compared to 1.8 million in the third quarter of 2003. There were two new projects in which revenue was recognized in the quarter. Royalty revenue in the third quarter was 1.5 million compared to 1.2 million in the third quarter of 2003. We earned royalty revenue in the quarter from 10 different licensees, most having multiple SOCs in production. We recognized royalty revenue from reports provided by the licensee which are typically received in the quarter following that in which licensee has sold or manufactured products containing our 1T-SRAM technologies. Product revenue was 76,000 in the third quarter compared to 511,000 in the third quarter of last year. Decreasing product revenues reflect our strategy to exit the discrete product business. We closed the quarter with no reported inventory on our balance sheet. However, we do have limited inventory available for sale that has been previously written off. Gross margin in the third quarter was 81% of net revenues compared to 76% in the third quarter of 2003. This increase in gross margin is attributable to higher portion of revenues coming from royalties compared to the third quarter of last year. Our gross margin on product sales was impacted by the write off of inventory in the amount of $71,000 and our gross margin on licensing revenue was primarily impacted by a loss position on one project. Operating expenses which include research and development were 6.1 million. So the total operating expenses of approximately 2 million was associated with the Synopsys litigation and approximately 200,000 is attributable to the uniram litigation. Our third quarter operating expenses also included stock base compensation charges of $8,000. Other income for the quarter was approximately 10.4 million which included 10 million dollar termination fee received from Synopsys, and approximately 400,000 from interest income. Net income for the quarter was 5.1 million or 15 cents fully diluted earnings per share compared to net loss of 249,000 or a loss of 1 cent diluted earnings per share in the same period last year. Third quarter diluted earnings per share were computed using 33,350,000 shares. Net income was calculated using an effective tax rate of 10% for the quarter. Significant revenues from licensees included NEC, Marvel, and Sony, representing 33, 14, and 12% respectively of total revenues for the quarter. During the quarter we generated approximately $6.7 million of net cash from operation resulting in cash, cash equivalents, and both long and short term investments totaling 90.5 million at the end of the quarter. Also during the quarter we purchased approximately 1.2 million shares of MoSys common stock for a total of approximately 4.7 million. As we announced in April the board of directors authorized the use of up to $25 million under this repurchase program. At quarter end, we had 85 employees of which 63 are engineers. That concludes my prepared remarks about the financial results. I will hand the call back over to Fu-Chieh, who will now discuss business highlights of the third quarter.

Thank you, Mark. During last quarter's conference call I stated that one of our objectives in reviewing our business was to further [INAUDIBLE] the board of directors of the company. To that end we identified several qualified candidates, and on August 12 announced the appointment of Tommy Eng, Chi-Ping Hsu, and Jim Kupek, as new outside directors of MOSYS board of directors. Tommy Eng joined the board with over 20 years of corporate management, engineering management, software/hardware design, and entrepreneurial experience in system high C design, and electronic design automation. Tommy was a founder of Tera systems. He previously held EDA company as well as serving as it's vice chairman, president, and CEO. Tommy also served as the general manager of Mental Graphics advanced high C design automation and design consultation division. Chi-Ping Hsu joins the MOSYS board of directors and is an accomplished EDA executive with over 20 years of experience. Chi-Ping Hsu is currently a vice president at Cadence Design Systems in charge of the company's synthesis product line and had served as the president and the chief operating officer of Get2chip a supplier of high performance system on chip SOC synthesis which was acquired by Cadence. Jim Kupek has also joined our board of directors. Jim was recently named chief operating officer of E-Silicon, a fabulous ASIK company. Jim has served as president of UMC USA, the united U.S. subsidiary of the wafer foundry United Macroelectronics Corporation, and also served for 14 years in senior management positions at Cypress semiconductor. Last serving as a senior VP where he directed the activities of four major product groups. We are pleased to have this industry veterans with such rich experience joining the MoSys board of directors. Each member has an impressive background of leadership and accomplishments in diverse technology companies which will be extremely beneficial to MoSys. We are confident that they will each bring a new and valuable perspective to our board as outside directors and we look forward to their contributions. Regarding the uniram litigation we are in the early stages of the case. We believe that we have strong defenses as to the invalidity and validity and the noninfringement of the patent brought by uniram in the case. With respect to the trade secrets part of the case, our attorneys are still trying to get uniram to specifically identify the trade secrets that they alleged were misappropriated. We will appraise investors on further developments in the matter when we are able to do so. We are also pleased to welcome Karen Lamar to the row of vice president of sales and marketing. Karen joins MoSys with an impressive track record of licensing intellectual property and the duties that set forth sales organization. Most recently at Superedge, Art International and Arm. I would like to hand the call to Karen for a few moments so she can introduce herself and share some of her initial insights regarding our customers and market. Karen?

Thank you Fu-Chieh. It's a pleasure to address you as the newest member of the MoSys executive team. Since joining the company in early September, I've been in meetings and discussions with both our current customers and prospective customers. I am encouraged by the magnitude and quality of customers with which we are engaged. In particular, we see strong interests in our 1T-SRAMQ technology as customer projects specify increased amounts of embedded memories. We have ported our 1T-SRAM(Q) to several foundry partners including TSMC, UMC and chartered semiconductor. With the excellent support at the major foundries, we look to proliferate the licensing of our 1T-SRAM(Q) to provide end customers a cost effective solution, to increase amounts of embedded memory. Furthermore, I'm delighted to announce that Kawasaki Microelectronics have licensed our 1T-SRAM(R) which will be used in high volume consumer applications. We also anticipate closing several other 1T-SRAM licenses with multiple customers in the near future. One of the primary strategic initiatives MoSys is focusing on is to expand our worldwide sales and market presence through the addition of channel sales representatives, i.e. reps. Towards that initiative, MoSys recently announced the appointment of Amos Technology as our sales representative in Israel. Amos Technology is one of the leading providers of IT design services and EDA design tools to the Israeli market. With the increasing growth of the Israeli semiconductor market, it is I imperative for us to establish a regional presence there in order to expand the scope of our sales opportunities. Amos Technology has the experience and knowledge that will enable us to effectively service this important market. Now I will turn the call back over to Fu-Chieh.

Although the third quarter results were constrained, we did continue to take important steps to further transcend the company. To compliment our exceptional engineering talent, we further enhanced our leadership team with the addition of a three new seasoned board members and the appointment of Karen Lamar as our new vice president of sales and marketing. I look forward to working with Karen who is focused on driving the proliferation of our innovative memory technologies into SOC designs. I would like to reiterate that due to the confidential nature of our licensing agreements we don't provide detailed information on specific projects or licensees. This is a contractual obligation that we must uphold in order to preserve our relationship with our customers. Aside from limits of this nature, we intend to disclose relevant material information concerning our business and operating results as we are able to do so. That concludes our prepared comments. We are now ready to take questions. When introducing yourself please first state your first and last name and your firm's name.

Ladies and gentlemen, if you wish to ask a question, please press star, followed by one on your touch tone telephone. If your question has been answered or you wish to withdraw your question, please press star, followed by two. Questions will be taken in the order received. Once again that is star one, if you would like to ask a question. It appears there are no questions at this time, sir.

Okay. Thank you again for participating in our call. Before we close I would like to reiterate that we remain confident in the positioning of MoSys and our technology. We continue the execution of our long-term strategy and we are committed to diversifying our customer base, increasing the number of licensees, improving the efficiency of the design cycle and devoting engineering resources. to further expand and improve upon our technologies. Thank you again for your continued support in MoSys and for your participation in this call.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.