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NetLogic Microsystems Announces Third Quarter 2010 Financial Results

^{Published on 2010-10-28 13:11:39 - Market Wire}
 

SANTA CLARA, Calif.--([ BUSINESS WIRE ])--NetLogic Microsystems, Inc. (NASDAQ:NETL), a worldwide leader in high performance intelligent semiconductor solutions for next-generation Internet networks, today announced financial results for its third quarter ended September 30, 2010.

"We recently marked another significant milestone in our technology roadmap with the transition of our product portfolio of multi-core processing, knowledge-based processing and physical layer solutions to TSMCa™s advanced 40 nanometer process node"

Revenue for the third quarter of 2010 was $100.1 million, a 5.3% sequential increase from $95.0 million for the second quarter of 2010 and a 136% increase from $42.3 million for the third quarter of 2009.

Third quarter 2010 net income, determined in accordance with generally accepted accounting principles (GAAP), was $5.2 million or $0.08 per diluted share. By comparison, GAAP net loss was $3.9 million or $0.09 per diluted share for the third quarter of 2009. GAAP net income for third quarter 2010 included stock-based compensation and related payroll taxes, changes in contingent earn-out liability, and amortization of intangible assets. Excluding these items, non-GAAP net income for the third quarter of 2010 was $27.9 million or $0.40 per diluted share, compared with $0.22 per diluted share for the third quarter of 2009.

Management Qualitative Comments

aWe recently marked another significant milestone in our technology roadmap with the transition of our product portfolio of multi-core processing, knowledge-based processing and physical layer solutions to TSMCa™s advanced 40 nanometer process node,a said Ron Jankov, president and CEO. aThis is a considerable achievement given the size and complexity of our solutions and further highlights the tremendous execution and expertise of our team. This accomplishment comes at a great time when the performance capability of our advanced portfolio is ideally suited for multiple market windows that are opening up this year and that will provide tremendous growth opportunity for many years to come. It also underscores our commitment to technology leadership and demonstrates our ability to consistently deliver an ambitious roadmap that keeps pace with the rigorous demands of next-generation networking and communications.a

Recent Highlights

• NetLogic Microsystems announced the availability of the XLPa" Multi-Core Processor Development Kit that includes comprehensive hardware and software tools, libraries, drivers and reference solutions to help accelerate time-to-market and reduce development effort for Tier One OEMs who are developing next-generation systems using the industry-leading XLP multi-core, multi-threaded processor.

• The company also announced the availability of its innovative NL10k knowledge-based processors, which are designed in the advanced 40nm process node, to further expand the IPv6 processing portfolio for next-generation switches and routers. The NL10k knowledge-based processors deliver 1.6 billion decisions per second of IPv6 processing while maintaining compatibility to previous generations of knowledge-based processors.

• H3C Technologies, a subsidiary of Hewlett-Packard Company and a leading global provider of IP-based products and solutions, selected NetLogic Microsystemsa™ AEL2020 dual-channel 10 Gigabit Ethernet (10GE) PHY device for both its S12500 and S9500E series core switches. The H3C S12500 is a series of core switches designed for use in next-generation data centers. The H3C S9500E is a series of new-generation core routing switches developed for use in the core layer of campus networks and data centers.

• Advantech, a global manufacturer of telecom computing blades and multi-core network platforms, and NetLogic Microsystems announced their collaboration to deliver the industry's most advanced 40-Gbps AdvancedTCA (ATCA) platform using NetLogic Microsystems' XLP multi-core, multi-threaded processors with 64 NXCPUsa", knowledge-based processors, and 10GE PHY solutions.

• Continuous Computing®, the global provider of integrated platform solutions that address the mobile broadband capacity challenge, and NetLogic Microsystems announced their collaboration to deliver the industry's highest performance 40G AdvancedTCA (ATCA) packet processing platforms using NetLogic Microsystems' XLP multi-core, multi-threaded processors with 64 NXCPUs, the NL11k knowledge-based processors and 10GE PHY solutions.

• NetLogic Microsystemsa™ market-leading multi-core, multi-threaded processors and knowledge-based processors powered best-in-class TD-LTE equipment from Motorola and Continuous Computing to provide TD-LTE coverage at the Shanghai World Expo 2010.

Conference Call

NetLogic Microsystems will hold its third quarter 2010 financial results conference call today at 1:30 p.m. Pacific time. To listen to the conference call, dial (866) 783-2137 ten minutes prior to the start of the call, using the passcode 14139643. International callers, dial (857) 350-1596. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial (888) 286-8010 and enter passcode 65493307. International callers dial (617) 801-6888.

The conference call will be available via a live webcast on the investor relations section of NetLogic Microsystemsa™ web site at [ http://www.netlogicmicro.com ]. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the web site for three months.

About NetLogic Microsystems

NetLogic Microsystems, Inc. (NASDAQ: NETL) is a worldwide leader in high-performance intelligent semiconductor solutions that are powering next-generation Internet networks. NetLogic Microsystems' best-in-class products perform highly differentiated tasks of accelerating complex network traffic to significantly enhance the performance and functionality of advanced 3G/4G mobile wireless infrastructure, data center, enterprise, metro Ethernet, edge and core infrastructure networks. NetLogic Microsystems' market-leading product portfolio includes high-performance multi-core processors, knowledge-based processors, content processors, network search engines, ultra low-power embedded processors and high-speed 10/40/100 Gigabit Ethernet PHY solutions. These products are designed into high-performance systems such as switches, routers, wireless base stations, security appliances, networked storage appliances, service gateways and connected media devices offered by leading original equipment manufacturers (OEMs). NetLogic Microsystems is headquartered in Santa Clara, California, and has offices and design centers throughout North America, Asia and Europe. For more information about products offered by NetLogic Microsystems, call +1-408-454-3000 or visit the NetLogic Microsystems Web site at [ http://www.netlogicmicro.com ].

NetLogic Microsystems, the NetLogic Microsystems logo, NXCPU and XLP are trademarks of NetLogic Microsystems, Inc. Alchemy is a registered trademark of NetLogic Microsystems, Inc. All other trademarks are the properties of their respective owners.

aSafe Harbora Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding NetLogic Microsystemsa™ business which are not historical facts may be aforward-looking statementsa that involve risks and uncertainties. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to, customer acceptance and demand for our products, the volume of sales to our principal product customers, the timing of our receipt of customer orders during the quarter, manufacturing yields for our products, the timing of manufacture and delivery of product by our foundry suppliers, potential warranty claims and product defects, the length of our sales cycles, our average selling prices, our ability to successfully develop and sell new products, the effects of any business acquisitions that we might make, the strength of the OEM networking equipment market and the cyclical nature of that market and the semiconductor industry. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see aRisk Factorsa in the Companya™s reports on Forms 10-K, 10-K/A, and 10-Q, as well as other reports that NetLogic Microsystems files from time to time with the Securities and Exchange Commissionwhich are available at [ http://www.sec.gov ]. All forward-looking statements are qualified in their entirety by this cautionary statement, and NetLogic Microsystems undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), this announcement of operating results contains non-GAAP financial measures that exclude the income statement effects of stock-based compensation and related payroll taxes, amortization of intangible assets, fair value adjustments of acquired inventory and related taxes, changes in contingent earn-out liability, acquisition-related costs, lease termination costs, interest income on RMI bridge note, establishment of deferred tax asset valuation allowance, and the effects of excluding stock-based compensation upon the number of diluted shares used in calculating non-GAAP earnings per share.

We have excluded stock-based compensation expense and changes in contingent earn-out liability in calculating these non-GAAP financial measures. These expenses are non-cash in nature and rely on valuations based on future events such as the market price of our common stock and revenue generated from products acquired in the RMI acquisition during the first 12 months following the close that are difficult to predict and are affected by market factors that are largely not within the control of management. We have excluded stock related payroll taxes, amortization of intangible assets, fair value adjustments related to acquired inventory and the related tax effect, acquisition-related costs, lease termination costs, interest income on RMI bridge note, and establishment of deferred tax asset valuation allowance because we do not consider them to be related to our core operating performance.

We use the non-GAAP financial measures that exclude these items to make strategic decisions, forecast future results and evaluate the Companya™s current performance. We believe that the presentation of non-GAAP financial measures that exclude these items is useful to investors because we do not consider these charges either part of the day-to-day business or reflective of the core operational activities of the Company that are within the control of management or that are used to evaluate managementa™s operating performance.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information regarding these non-GAAP financial measures, and managementa™s explanation of why it considers such measures to be useful, refer to the Form 8-K dated October 28, 2010 that the Company has submitted to the Securities and Exchange Commission.