CC notes: Before giving the details, I will first note that this CC was one of the worst I have ever heard. I have never heard such contradictory and confusing data coming out of a conference call. Just a short list of some of the contradictions:
1) Initially it was implied that the only sequential growth area was Communications but then it was said that 'Consumer Products was up due to DIVX'. Finally it was said that the DIVX growth was offset by a decline in video games due to weakness in Japan. So what is it? Up, down, stable?
2) Initially it was said that communications grew 20% sequentially, but then he said that wireless was weak and networking was a disappointment. Is there some segment of communications I'm missing? Is 20% growth not good? I think much of the confusion comes from not stating specifically things like Y/Y vs Q/Q, or orders booked vs rev's, or disappointment vs what expectations, ... .
3) Initially he said computing was down but later he said it was up. I think the latter was a mis-statement, but of course it is impossible to know for sure since it was never corrected.
Suffice it to say that it was very hard to figure out what was happening, but the following is my best guess:
1) Wireless rev grew more than 20% sequentially.
2) Networking rev grew, but less than 20% seq.
3) Consumer revenues were stable.
4) Computer business was down a lot. (Note: Given that computing was about 20% of business in Q2 that implies a huge loss in this area - substantially greater than 50%.)
5) Rev's in Q4 are expected to be relatively flat to down from Q3. (The only additional breakdown given was that wireless is expected to be down, I presume sequentially although it wasn't said explicitly.)
6) Margins were hurt this quarter by poor fab utilization.
7) Wireless design wins (in GSM, TDMA and infrastructure) are up substantially vs last year as judged by the metric of estimating 3 yr revenues for each win.
8) Moving to 0.15u Q3 next year. Currently at 0.25u and moving to 0.20u starting next Q.
9) CDMA is still in evaluation (both generic products and company specific ASIC's). Shipments aren't expected until Q3 next year.
10) Everyone is ordering with little lead time. (Note: This makes visibility nil, but it also means that upticks like orders for Xmas are probably not visible yet.)
In conclusion, while I feel that VLSI is definitely undervalued at $7 per share, it is also true that, without doubt, VLSI needs to hire back Byer or someone like him. Al is either overworked or incompetent, and either way something needs to be done.
Clark
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