ESST Q3 CC, Oct 24,2001
Financials:
Rev 72.4 mil up 12 per Q-Q, down 17 per y-y
GM 37 per ver 29 per q-q, 40 per Y-Y comparison
Inventory charge of 1.7 mil, excluding charge GM 39 per
R+D 7.3 mil, 10.7 per
SGA 11.7 mil or 16 per ver 14 per q-q due to legal cost and accounting fees for re-statements due to spin off of shares to shareholders
tax rate 5 per
cash 100 mil up 27.4 mil q-q, up 9.1 mil y-y
41.2 mil increase in cash for year
AR 35.6 mil ver 37.5 mil q-q
DSO 45 days down from 52
inventory 46.9 mil down 22 per q-q
accounts payable 43.6 mil ver 46.7 q-q
bought back 700,000 shares for $5.51 mil in q
over 2 years ago shifted from PC market to consume market, change has paid off
grew in Q3, up 12 per from q2 due to digitial video demand, feature and cost of EEST chip helping us to gain share, over 10 mil video units sold, DVD rev up 70 per q-q, 2 mil DVD units shipped in Q, gaining market share
have 50 percent of video market, include video, digital video etc ..., market leader
shipped 5 mil in DCV units, very strong growth, new products helping us to gain share
shipped 4.2 mil in computer rev
DCV shipments about projections
PC shipments below projections
DVD shipped 3.5 mil in Q
DVD shipments growing, number 1 market share
DCV shipments above estimates, 70 per rev gain, sales outside China to Indonesia and Brazil
growth lead by DCV products
PC rev 15 per of rev
inventories down, now close to desired levels
will continue to reduce though
new DVD design wins in Q, Japan and Korea region added to customer list, China region main customer in past
New Bravado chip to ship this Q
Kodak design win so DV can be played on TV,
Also new design for JPEG on TV
this month MSFT deal for MSFT media_audio compression technology, 1 st chip company to do so.
Guidance:
Seasonality will effect next Q results
Q4 flat to Q3
Q1 seasonally down from Q4
DVD will strongly, DVD will grow in Q4
Two product segments:
DMedia - will be 80 to 90 per of rev, grow by 10 to 15 per q-q
PC segment 10 to 20 per of rev, decline next q, last year segment was 40 per, will be 15 per of rev going forward
Total rev for 2001 255 to 260 mi
Q1 51 mil
Q2 - 65 mil
Q3 - 72 mil
Q4- 68-74 mil (next Q)
Q1 2002 - 53 to 57 mil
GM 37 to 38 per for next 2 q's
R+D 11 to 12 per
SGA 16 to 17 per
Non Op Income 2 per increase for q
tax rate 5 per
45.8 mil shares out
eps:
Q4 17 to 22 cents
Q1 2002 6 to 9 cents
Q) Visibility Q4
A) Uncertain times due to economy so being conservative, Oct last month to ship for X-mas, PC audio will be weaker in Q, DVD will grow in Q4, 10 to 15 per Q-Q growth in DVD, PC will be weaker than expected
Q) visibility into cutomer inventory and at consumer level
A) no inventory build up, DVD demand strong, some customers still trying to ramp capacity for X-mas even at this late date, indicates very little inventory
Q) Pro-forma R+D 6 mil? Down. Why? Trend?
A) Take out acq cost, focus on digital home + video product line, R+D should go down going forward
Q) 50 per of DVD market?
A) No. number 1 in share. 50 percent of all DCV shipments. 3.5 mil of DVD chips shipped in Q, market for year 30 mil, maybe 1/3 of total DVD market for year, need to wait for year end numbers
Q: DVD growth unit or rev?
A: Unit, but rev growth similar next Q
Q: over all market growth 10 to 15 per Q-Q?
A: not necessarily, gaining share so our rev will increase, Q3 usually high in shipments, feature + cost helping us gain share
Q: 30 mil for year, source?
A: IDC, Connor In-Stat, 28 to 31 mil will be shipped in year
Q: Per parts shipped in China
A: most of video players made in china and then shipped else where, Most shipped in Japan, US, Europe, Indonesia, Malaysia
Q: Local China market?
A: 1.5 mil DVD sold in China, 2.5 to 3 mil this year will be sold in China, 6 to 8 mil next year
Q: Break down by product line?
A: No detail given. DCV sales 5 mil at ASP 4.50 and DVD 4.5 mil at 10, audio and modem small part of rev
Q: Legal issues with PC Tel?
A: Ruling last week. 2 PC Tel patents. More important one on UART, ruled not infringing, On minor one on wake up on ring in modem, ruled that anyone who is MSFT logo compliant would infringe. appealing, judge first patent case, applies only to PC modem card, not desktop and laptop, will appeal
Q: 45.8 mil share count in Y2002?
A: yes
Q: 37 to 38 per GM Q4?
A: Q4 and Q1.
[Harry: Fairly positive call. Seasonality effect stocks, but DVD ramping nicely. DVD pricing now falling to level that should drive more consumer demand. One of few stocks with visibility.] |
