TranSwitch Corp. Reports 1Q 2009 Financial Results

May 11, 2009 (Close-Up Media via COMTEX) -- TXCC | Quote | Chart | News | PowerRating -- TranSwitch Corp., a provider of semiconductor solutions for the converging voice, data and video network, announced financial results for the first quarter ended March 31.

In a release on May 7, the company noted that net revenues for the first quarter of 2009 were approximately $14.2 million, as compared to net revenues of $15.0 million for the fourth quarter of 2008 and $7.5 million in the first quarter of 2008. The GAAP net income for the first quarter of 2009 was $4.0 million, or $0.03 per basic and diluted common share as compared to a net loss of ($4.3) million, or ($0.03) per basic and diluted common share during the fourth quarter of 2008 and ($5.5) million, or ($0.04) per basic and diluted common share, during the first quarter of 2008.

The non-GAAP gross margin for the first quarter was 60 percent. This is compared to the company's non-GAAP gross margin of 58 percent, for the fourth quarter of 2008, and 61 percent for the first quarter of 2008. Presented on a GAAP basis, the first quarter of 2009 GAAP gross margin was 58 percent on total revenues. This is compared to the company's GAAP gross margin of 53 percent for the fourth quarter of 2008, and 61 percent for the first quarter of 2008.

Non-GAAP results were a net loss of ($1.2) million, or ($0.01) per share for the first quarter of 2009 compared with a non-GAAP net loss of ($3.7) million, or ($0.02) per share, for the fourth quarter of 2008 and a non-GAAP net loss of ($4.7) million, or ($0.04) per share, for the first quarter of 2008. The non-GAAP results for the first quarter 2009 excluded a $6.2 million reversal of an accrued restructuring liability, amortization of purchase price intangibles of $0.4 million, stock-based compensation of $0.3 million and the $0.2 million write-down of the Centillium acquisition-related inventory valuation due to purchase accounting.

The $6.2 million reversal of an accrued restructuring liability was due to the consummation of an agreement on March 3, with a Fortune 500 company to sublease through the year 2014 approximately 93,000 square feet of excess office space. The non-GAAP results for the fourth quarter 2008 excluded restructuring expenses of $3.8 million, amortization of purchase price intangibles of $0.3 million, stock-based compensation of $0.5 million, the $0.7 million write-down of the Centillium acquisition-related inventory valuation due to purchase accounting and benefits of $4.5 million related to a gain on debt repurchased and $0.2 million due to the reversal of accrued royalties. The non-GAAP results for the first quarter of 2008 excluded amortization of purchase price intangibles of $0.1 million, $0.4 million in stock-based compensation and $0.2 million of restructuring expenses. Further information about non-GAAP measures and a reconciliation to the GAAP results is provided after the financials attached to this release.

"TranSwitch in the first quarter of 2009 successfully navigated through one of the worst economic environments that any of us can recall. We are very proud of the fact that even in these worst of times, our business has remained relatively steady since the third quarter of 2008, unlike some of our peers in the communications semiconductor industry, who have seen their revenue decline by as much as 50 percent within this timeframe" stated Dr. Santanu Das, President and CEO.

"We also substantially completed our integration of Centillium Communications as well as our company-wide restructuring," continued Dr. Das. "These actions have effectively reduced our operating expenses to the point that we expect to break even in the second quarter on a non-GAAP operating income basis."

"We believe the 'new TranSwitch' is poised to be a global leader in the communications semiconductor industry, offering a broad range of next-generation telecom products addressing both copper and fiber-based broadband access, optical transport, carrier Ethernet, and Voice-over-Internet Protocol (VoIP) applications," added Dr. Das.

"While the first quarter was challenging for everyone, increasingly we see carriers around the world committing to new network installations as well as upgrades of current infrastructure. The various economic stimulus initiatives in the United States, China, and India should only serve to accelerate both the pace of these deployments and ultimately the benefit to TranSwitch," added Dr. Das.

"Our overall backlog position for our telecommunications products is significantly stronger than at any time in the past several years. However, the backlog in our ASIC product lines is not comparable in strength, and as a consequence we are being prudent in our second quarter guidance. As such, we are forecasting TranSwitch revenues in the second quarter of 2009 to be comparable to the first quarter of 2009. At this revenue level, we should break-even on a non-GAAP operating income basis. We estimate our second quarter 2009 GAAP net loss to be roughly ($0.01) per basic and diluted common share," stated Dr. Das.

"Based on the current order position, including our current backlog for the quarters ending in June and September 2009, TranSwitch should see a resumption of revenue growth as we move into the second half of 2009. Although our revenue outlook is positive, we will continue to maintain our focus on expense discipline so that our quarterly expenses remain essentially flat on a sequential basis through the remainder of this year. Any additional gross profit we generate should fall to the bottom line," concluded Dr. Das.

TranSwitch Corp. designs, develops and markets innovative semiconductors that provide core functionality and complete solutions for voice, data and video communications network equipment.

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