WJ Communications Announces Third Quarter Results
Tuesday: Semiconductor Revenues Grow by 63% Sequentially -- Record Q3 Gross Margins
WJ Enters RFID Market -- Board Expands Existing Share Repurchase Program
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 21, 2003-- WJ Communications, Inc. (Nasdaq:WJCI - News), a leading designer and supplier of high-performance RF semiconductors and multi-chip modules (MCM), today announced results for its third quarter, ended September 28, 2003.
Revenue for the third quarter of 2003 was $6.9 million, an increase of 26% sequentially from $5.5 million in the immediately preceding quarter. Importantly, revenue from the Company's semiconductors increased 63% from the immediately preceding quarter to $5.2 million. Revenues for the third quarter of 2002 were $9.3 million and included $4.8 million in revenues from legacy businesses that have either been sold or are being exited as the Company continues its transition to becoming a pure play RF semiconductor company.
In the third quarter, WJ Communications achieved its highest gross margins since going public in 2000 while significantly reducing its net loss. On a U.S. GAAP basis, the Company's net loss was reduced by $549,000 sequentially to $3.3 million or $0.06 per common share for the third quarter of 2003. This compared to a net loss of $27.0 million or $0.48 per share in the same period last year. The third quarter of 2002 included a restructuring charge of $22.9 million which consisted of the write-down of assets related to certain products in the Company's wireless sub-assembly and fiber optics businesses, an excess facility charge and a charge related to severance costs. The Company ended the third quarter of 2003 with cash and short term investments of $61.6 million.
WJ also announced today that its Board of Director's has approved an additional $2.0 million to expand its existing share repurchase program increasing the total amount authorized to $4 million. These funds are available for immediate use and shares will be purchased from time to time in the open market or in private transactions at management's discretion subject to market conditions.
"As we previously forecasted, we have returned to solid sequential and year-over-year growth in RF semiconductors," said Michael Farese, Ph.D., Chief Executive Officer and President of WJ Communications. "Our record number of design wins and rapid product development gives us reason for optimism that we are continuing to strengthen our competitive position. Additionally, with our success in winning market share and positive signs of increased demand, we are confident that we are well positioned to continue to grow our semiconductor business even in a difficult market."
"At the same time, we are highly focused on expanding our addressable market opportunity and announced this quarter a major new expansion into the fast growing RFID market," added Dr. Farese. "Leveraging our core RF expertise, we formed a strategic partnership with Alien Technology to address the need for low-cost RFID readers capable of working in real-world environments. WJ is applying both its radio design expertise and RF semiconductor integration IP to offer a breakthrough improvement in reader performance with a significant reduction in cost and form factor. We are very pleased that we have recently received an initial purchase order from Alien for of these RFID readers. Combined with our re-entry into the homeland security and defense market and our success in CATV, our announcement on RFID is firm evidence that we have greatly expanded the market opportunities for our leading RF semiconductors."
Other recent highlights include:
-During the third quarter, the Company achieved a record 40 new semiconductor design wins. For the first nine months of 2003, the Company achieved a total of 114 semiconductor design wins compared to 74 for the same period in 2002.
-WJ Communications continued to introduce new products, 16 since the beginning of the year. For the third quarter, the Company added to its line of variable gain amplifiers with the wide-band high dynamic range VG024, which addresses the need for higher performance for newer wireless protocols such as W-CDMA and GSM Edge. Additionally, the Company also developed a mixer aimed specifically at new CATV applications complying with DOCSIS II and Euro-DOCSIS standards.
-On October 16, the Company announced that it has received its first production order for its SX2000 compact RFID reader engine from Alien Technology.
-The Company announced today that its Board of Directors has approved an additional $2 million to be added to its stock buy-back program, increasing the total amount authorized to $4 million. These funds are available for immediate use.
-This quarter, the Company appointed seasoned executive Liane Pelletier to its Board of Directors. Ms. Pelletier recently was appointed CEO and President of Alaska Communications Systems Group, Inc. (Nasdaq: ALSK - News), after a long career as a senior executive at Sprint Corporation (NYSE: SDE - News).
"Gross margins improved significantly in the third quarter, reaching 46.2% on a non-GAAP basis, a record since WJ's initial public offering," added Fred Krupica, Chief Financial Officer of WJ Communications. "Additionally, we were able to decrease operating expenses in both absolute dollars and as a percentage of sales. These improvements, combined with the solid increase in semiconductor sales, led to a $1.7 million reduction in non-GAAP net loss on a sequential basis and a $976,000 improvement from last year."
"Moving forward, we currently believe we can continue to grow our wireless RF semiconductor business and continue to expand into new markets," concluded Dr. Farese. "At the same time, as we have expected, the fourth quarter will bring significant declines in our wireless sub-assembly revenues to less than $300,000 as these products near the end of their life cycle. Offsetting this decline, we anticipate a meaningful sequential increase in our semiconductor business, leading to fourth quarter revenues in the range of $6.0 to $7.0 million and an improving business model."
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