Mosaid rallies with super increase
Semiconductor firm credits recovering global market
Wednesday 24 November 1999
Karyn Standen
The Ottawa Citizen
Mosaid Technologies Inc. yesterday credited a recovering global
semiconductor market and growing sales of established and new business
lines for a whopping 114 per-cent year-over-year increase in its fiscal 2000 second quarter revenue.
The Kanata semiconductor design company posted a net profit of $519,000, or seven cents a share fully diluted, on sales of nearly $11.64 million for the quarter ended Oct. 29. That compares with a net loss of $1.3 million, or 19 cents a share fully diluted, on revenue of nearly $5.47 million in the year earlier period.
In a poll by IBES Inc., Brian Piccioni, an analyst with Nesbitt Burns Inc., forecast earnings of three cents a share.
Mosaid's shares closed down 85 cents to $16.40 yesterday on the Toronto Stock Exchange. The financial results were released after the market close. Even so, the stock has climbed nearly 131 per cent in value since Jan. 1.
"The DRAM (Dynamic Random Access Memory) industry is recovering,"
said George Cwynar, president and chief executive. "Our patent licensing programs É have generated for us a strong backlog and future revenues." He added the company has a "better backlog of testers now" as well.
In July, Mosaid said licensing agreements with Fujitsu Ltd., NEC Ltd., and Toshiba Corp. will add $13 million in sales this fiscal year. The announcement sent Mosaid's stock up 11 per cent at the time. The Japanese semiconductor companies will use Mosaid's techniques to develop computer-memory chips and other related products. Mosaid signed its agreement with Fujitsu in January, and the other two in July.
"This is a positive story for Mosaid," said Duncan Stewart, manager of Tera Capital Corp.'s Navigator Canadian Technology Fund. "(The results) are well ahead of my expectations. Mosaid is going back to $30. It's just a slow, patient accumulation. It's nice to see Mosaid doing the turnaround that we knew it had in it."
Mosaid saw sequential quarterly revenue growth in both its semiconductor and systems divisions, fueled by "strong contributions" from its fabless semiconductor initiatives, intellectual property licensing, and automatic test equipment businesses.
Sales of Mosaid's engineering systems used to test chips were up 37 per cent from the year-earlier period, accounting for 39 per cent of the company's overall revenue in the quarter just ended. Sales from its semiconductor division comprised 61 per cent of total quarterly revenue.
Richard Boadway, Mosaid's chief financial officer, called the numbers a "dramatic" change from the 50-50 split in sales by the two divisions in the two divisions last year.
Mosaid continues to "expand our patent licensing program in terms of its reach," Mr. Cwynar said, adding that six new semiconductor manufacturers are "on notice" regarding future licensing agreements. He said it's "unpredictable in terms of when we might reach further arrangements" with these companies, which he described only as DRAM manufacturers "somewhere in the world."
The company also said a milestone in its new fabless business was hit in September when it launched its Class-IC series of ternary Content
Addressable Memories (CAM) product line.
"Launching the Class-IC product line was a watershed event in our fabless strategy," Mr. Cwynar said.
CAM is specialized memory that's becoming increasingly important in the network switching market. To send a message, network systems have to look up destination addresses. Historically, this has been done by software. But as demand for bandwidth and speed increase in leaps and bounds, looking up addresses "will have to be done in hardware (systems) or on a piece of silicon," Mr. Cwynar said.
"The fastest way to do this is with specialized memory called Content
Addressable Memory."
Mosaid's CAM line is its first foray into the networking marketplace, and holds "tremendous potential, due in large part to our market expertise" and technical know-how, Mr. Cwynar said. He declined to reveal any revenue projections for the new product, saying only "we believe it will be a strong growth market." He said the company is holding sales talks with "all kinds of customers in the switching marketplace."
CIBC World Markets Inc. forecast in a report released last week that
Mosaid's fiscal 2000 revenue will increase by 75 per-cent, or $39 million. Mosaid posted sales of nearly $22.8 million last year. In its report, CIBC World Markets points to forecasts from U.S. research firm Dataquest saying DRAM memory revenue will climb 44 per-cent next year and 48 per cent in 2001.
Valentine Lee, an analyst with HSBC Securities (Canada), said the
"generally ... positive" semiconductor equipment market, including a
semiconductor book-to-bill ratio of 1.09, is "good news for Mosaid's core business." |
