Silicon Motion Technology's CEO Discusses Q2 2012 Results - Earnings Call Transcript
July 27, 2012 10:55 AM ET
Silicon Motion Technology Corp (SIMO)
Q2 2012 Earnings Call
July 27, 2012, 8:00 a.m. ET
Jason Tsai – Director of IR and Strategy
Wallace C. Kou – President, CEO, Director
Riyadh Lai – CFO
Anthony Stoss – Craig-Hallum Capital
Daniel Amir - Lazard Capital Markets
Rajvindra Gill – Needham & Co.
Mike Crawford – B. Riley & Co.
Tom Sepenzis – Northland Sec
Peter Lau – Nomura
Monika Garg – Pacific Securities
Good day, ladies and gentlemen and welcome to the Second Quarter Silicon Motion Technology Corporation Quarter Two, 2012 earnings conference call. My name is Maryanne and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).
Before we begin today’s conference, I have been asked to read the following forward-looking statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include, without limitation, statements regarding trends in the semiconductor industry and our future results of operations, financial condition and business prospects. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties and actual market trends and our results my different materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include but are not limited to continued competitive pressure in the semiconductor industry and the effect of such pressure on prices, unpredictable changes in technology and consumer demand for multimedia consumer electronics, the state of, and any change in our relationship with our major customers and changes in political, economic, legal and social conditions in Taiwan.
For additional discuss of these risk and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements which apply only as of the date of this press release.
I would now like to hand the presentation over to our host, Mr. Jason Tsai, Director of IR and Strategy. Please proceed.
Thank you very much, and good morning, everyone and welcome to the Silicon Motion second quarter 2012 financial results conference call and webcast. My name is Jason Tsai. I’m the Director of IR and Strategy. With me here is Wallace Kou, our President and CEO and Riyadh Lai, our Chief Financial Officer.
The agenda for today is as follows. Wallace will start with the review of some of our recent business developments. Riyadh will then discuss our second quarter financial results and provide our outlook. We’ll then conclude with Q&A.
Before we get started, I’d like remind you of our Safe Harbor policy, which is read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the U.S. SEC. For more details on our financial results, please refer to our press release, which is filed on Form 6-K after the close of market yesterday.
This webcast will be available for replay on our website, www.siliconmotion.com for a limited time.
To enhance investor’s understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measure internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner similar to how we analyze our own operating results. The reconciliation of GAAP to non-GAAP financial data can be found in our earnings release issued yesterday. We ask that you review it in conjunction with this call.
With that, I would now like to turn the call over to Wallace.
Thank you, Jason, and thanks to everyone for joining us on this second quarter earnings call. I’m happy to report another strong quarter with revenue increasing by 9% sequentially to $69.7 million in the second quarter.
While the overall market condition continues to be challenging, the strong realm of our new growth products were able to offset the three unfavorable market conditions relating to the sales of core products and contribute strongly to our second quarter growth. This quarter, we delivered $0.42 in diluted earnings per ADS, an increase of $0.29 diluted earnings per ADS a year ago. Riyadh will discuss our financial result in greater detail later on the call.
In the second quarter, our new growth product grew by a strong 75% sequentially and accounted for 32% of our revenue in the second quarter compared to only 20% of our revenue in the previous quarter. The 32% [inaudible] of our revenue from new growth products is significantly more than our previous target of 25% by the end of 2012. For full-year 2012, we now anticipate our new growth products to account for 30 to 35% of our revenue and roughly 40 to 45% next year.
For many years, we are being adopting new products that will enable us to deliver sustainable longer-term growth as the growth of our core products show sign of a deceleration. The market of our core products, current USB flash drive controllers, Mobile TV and the CDMA RF and graphic processes are not increasingly mature. The products that will drive our longer term growth are our new growth products, specifically our [inaudible] plus embedded and LT solutions. These new growth products leverage the underlying leading edge NAND flash controller technology and mobile transceiver technology that we have been developing for our core products.
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