S3 CC notes
Sorry about missed comments.
Net annual rev 352.6mm, qtr rev $180mm
1st qtr S3 revs combined with DIMD revenues
70% graphics revenues
30% communications revenues
GM 2% after adjustments
Adjustments were: End of life viper 770 and
Inventory Revaluation of savage 4 chips
Higher wafer and memory costs also impacted GM
(this portion I wasn't clear on, it was too fast)
70.4 mil spending
48.4 mil expense spending
1.6 mil rio port.com spending in oct.
46.8 mil net expense
$4 mil below q3 expenses
1025 headcount from 1200 in q3
tax $48 mil net tax benefit
due to recognition in gain for USC
Balance Sheet
78.3 mil receivables = 38 daysales outstanding receivables
105 mil cash
97.2 mil inventory
53.2 mil in channel = 5 weeks inv.
Revenue consisted of:
North America 46%
Europe 25%
Asia 29%
2 OEMs more than 10% of revs
KP
Growth and opportunities/actions for spinoff/continuing progress
Growth
46% sequential quarterly growth
76% growth for Rio, unable to keep up demand due to flash memory
Will announce more products, more alliances in
home networking, home free, phone line, wireless, powerline technology (Intellon)
DSL (covad).
Lehman brother retained to release high value businesses vs graphics biz
Internet appliances mentioned as well as Transmeta
Mobile business from: Toshiba, NEC, Micron
Integrated roadmap
Sampling product for chipsets with OEMs now
Cleaned up Diamonds inventory issues
Changed accounting products to reflect sell through of distribution
$180 mil revenue line this qtr reflects that
Q&A
Sales of graphics qtr to qtr
70% graphics
46% growth from nongraphics sequentially
charge: inventory writedowns
elimination of viper 770 inventory and savage 4 inventory
Brian Alger
Quantify writedown of inventory
Would you have met 20% gm? Evaded
No (higher mem prices)
Tax benefit, NOL eliminated? Yes, no more left
Gain on UMC taxed at what rate next qtr?
It will be taxed at 38-40% tax rate.
However, no physical tax, until shares are sold. Balance sheet adjustment
Reserve will be setup for tax
Savage 4 chips wrote off: bad inventory? No, cost reduction. Mark to market.
Number9 assets? IBM reception? End result of product line? Integration of people?
IBM part of acquisition approval. Hired all engineers and most people.
Via investment
Small % of via.
Via transaction to close in 2 weeks. Fully diluted share count 89 mil shares
Cap ex? No
Cash burn? Don't know
Savage2000 in full production
Focus allocation to retail vs oem.
Floodgates open to retail
Capacity issues? No
4-5 weeks of inventory target at retail.
Dan Scoval
Non graphics biz
Profitable without graphics? Yes. Fast growing also.
Rioport.com
Ipo? Hiring a ceo soon
This summer
Own 45% of rioport
Vulcan (Paul Allen) /oak/ mtv(20%) are other VC partners
Professional graphics in germany?
Substantially profitable. IBM partner. FireGL, will broaden workstation solutions
Not to be separated with multimedia. Stay part of graphics
Via $146 mil cash infusion. HSR ruling feb 11. Via will have 14.9%, will have to rule 13D, and file intentions about graphics division.
Spinoff, which company will KP go with?
No announcements
Thomas Gardner
Media profits comment on CNBC?1st qtr of consolidated profits: revaluation of inventory, taking hit this qtr. Forward going, improving health of overall health, graphics need to be lean and mean.
2 qtrs out forecast? No answer.
Separate assets of model.
ATI example: 15x earnings
Communications 40-60x earnings
Will definitely spin out company.
Graphics drivers problems: changing business model to launch single product via diamond brand and few oems.
Changing type of customers dealing with. To improve product quality.
Any dual chip board? No comment
Via S3 agreement? Intel has no affect on agreement because license pact is robust.
John Barton
Rioport unit numbers? $18 mil q4 rio sales. 76% qtr on qtr growth.
Need more flash memory. Competing with digital camera.
Redesigned product to take multiple memory configurations.
3rd generation around may.
Mp3 homebased products. Will have more partnerships announced
Rioport moved from 100ks to millions in revenue.
Steve Berman ABN Amro
Convertible notes behavior when company is split?
No plan yet.
MP3 liabilities?
Already had RIAA litigation, settlement agreed to, and "won". Building DIMD and Rioport and SIMD partnerships.
Commerce channel distributor
No disputes now.
Working with music industry.
Rio hardware is in communications group.
Mezzanine financing planned.
Strategic corporate investors.
Question: Inventory : 5 weeks $52 mil revenue. Cut off.
Last Comment:
Rio hardware: insatiable demand. Improved and increased gross margins. Family of products planned. Marquee strategic partners. |
