Alliance Semiconductor Reports Financial Results for the First Quarter Ended July 3, 1999; Revenues Up 174% and Net Income of $53.4 Million
SAN JOSE, Calif.--(BUSINESS WIRE)--July 22, 1999--Alliance
Semiconductor Corporation (Nasdaq: ALSC) today reported revenues for
the first quarter ended July 3, 1999, of $17.7 million, up 174% from
the year-ago quarter and up 28% from the prior quarter's revenue of
$13.9 million.
Net income for the first quarter was $53.4 million resulting in
$1.27 per share (diluted), compared to a net loss of $(14.7) million,
or $(0.36) per share on revenues of $10.1 million during the same
quarter last year.
Net income for the first quarter ended July 3, 1999 includes a
net profit of $1.5 million, or $0.04 per share attributable to
recognition of the Company's share of net income from its joint
venture ownership in United Semiconductor Corporation (USC), based on
approximately 15.10% ownership. For the second fiscal quarter ending
September 30, 1999, the Company expects to report net income from its
investment in USC of approximately $4.0 million, based on its
ownership of 14.76%.
Net income for the first quarter also includes an unrealized gain
of $51.6 million, or $1.22 per share (diluted), related to the
transfer of its shares in Maverick Networks to Broadcom Corporation
(Nasdaq:BRCM), as a result of the merger of such companies which was
completed May 31, 1999. The total unrealized, after tax gain on,
Alliance's investment in Broadcom Corporation at the end of the first
quarter was approximately $64.8 million, which includes a $51.6
million gain reported at the closing of the merger during the first
quarter. The Company is no longer restricted from selling its
approximately 485,000 shares of Broadcom stock (Nasdaq: BRCM).
Alliance CEO, President & Chairman, N.D. Reddy said, "We are
disappointed that we did not take advantage of strong SRAM and DRAM
demand during last quarter due to the delay in availability of some
higher speed grades of both SRAM and DRAM products. Because of this,
the Company missed additional revenue opportunities of approximately
$3 to $4 million and would have achieved strong positive operating
income instead of a $0.7 million operating loss."
N.D. Reddy also said, "The current booking activity remains
strong as we continue to expand our customer base with key OEM
accounts in non-PC market segments. Last quarter, the overall average
selling prices for DRAMs and SRAMs increased. We expect to see
sequential growth in both revenues and operating income during the
September second quarter."
SRAM and DRAM sales for the quarter accounted for approximately
43% and 54% of revenues respectively. The current sales order backlog
for this quarter's shipments is approximately $10 million as of July
21, 1999.
The $14.3 million inventory increase during the quarter was due
to early production in anticipation of higher wafer prices in Taiwan
as well as higher anticipated sales during the first and second
quarters. Inventories are expected to decline during the second
quarter.
New Products
On June 28, 1999, the Company announced the first product of an
Internet Protocol Routing Processor (IPRP) family which leverages the
Company's logic and embedded memory technology to enable hardware
accelerated wire speed routing of IP packets, and offers the first
silicon solution that lets internet router OEMs forward data packets
at up to OC 192 speeds (9.6 Gbits/sec) in next generation
multi-gigabit and terabit routers. This product is currently being
sampled with a number of OEMs.
During the second quarter, the Company will introduce a number of
higher density SRAM and DRAM products based on 0.25 micron and 0.18
micron technology which should enable the Company to enhance revenues
in future periods.
New Investments
The Company currently plans to invest approximately $7 million
during the second quarter in a number of start-up companies whose
focus is in the emerging networking and internet market segments and
where the Company can leverage it's core competencies in memory and
technology.
UMC Merger
On June 14, 1999, United Microelectronics Corporation (UMC)
announced plans to merge four semiconductor wafer foundry units, two
joint venture units in which Alliance has investments, United
Semiconductor Corporation (USC) and United Silicon Incorporated
(USIC), into UMC, a Taiwanese public company. According to the
proposed terms of the merger, Alliance will receive approximately
283.3 million shares of UMC. The estimated value of Alliances'
potential ownership in UMC is approximately $585 million based on the
closing market price for UMC shares as of July 20, 1999.
The merger is subject to shareholder and government approval and
is expected to close before the end of the calendar year. According to
Taiwanese law and regulations, 50% of the 283.3 million UMC shares
Alliance expects to receive will be subject to a six-month "lock-up"
or no trade period. Of the remaining 50%, or 141.6 million shares,
approximately 28.3 million shares will become eligible for sale two
years from the closing date of the transaction, and an additional 28.3
million shares will become eligible for sale every six months
thereafter.
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