Q2 2012 Earnings Call
July 30, 2012 4:30 pm ET
Gregory S. Lang - Chief Executive Officer, President and Director
Michael W. Zellner - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance
James Schneider - Goldman Sachs Group Inc., Research Division
Harlan Sur - JP Morgan Chase & Co, Research Division
Ruben Roy - Mizuho Securities USA Inc., Research Division
Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division
Srini Pajjuri - CLSA Asia-Pacific Markets, Research Division
Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division
Sundeep Bajikar - Jefferies & Company, Inc., Research Division
William S. Harrison - Signal Hill Capital Group LLC, Research Division
Welcome to the PMC Second Quarter 2012 Earnings Conference Call. My name is Christine, and I'll be your operator for today's conference. [Operator Instructions] Please note, today's conference is being recorded. I will now turn the call over to Jennifer Gianola, Director of Investor Relations. You may begin.
Thank you, Christine. Good afternoon, everyone, and thank you for joining the call. With me today are Greg Lang, President and CEO; and Mike Zellner, Vice President and CFO. Greg will begin the call with a discussion of the business and key highlights from the second quarter 2012, and Mike will then discuss the financial results for the second quarter of 2012 and the business outlook for the third quarter of 2012. Please note that our second quarter 2012 earnings press release was disseminated today via BusinessWire and a copy of the release can be downloaded from our website. Before we begin, I would like to point out that during the course of this conference call, we will be making forward-looking statements that involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, PMC's limited revenue visibility due to variable customer demand, market segment growth or decline, customer concentration, bookings rate, changes in inventory, supply constraints, foreign exchange rates and volatility in global financial markets, and other risk factors that are detailed in the company's Securities and Exchange Commission filings. Actual results may differ materially from the company's projection. For further information about these risks and uncertainties, please read the company's SEC filings, including our Forms 10-K and 10-Q.
Note that PMC undertakes no obligation to update any forward-looking statements. Please note that for each of the historical non-GAAP financial measures mentioned on this call, a full reconciliation to the most comparable GAAP financial measures is included on our press release issued today. In addition, a GAAP to non-GAAP reconciliation of financial measures noted in our outlook will be posted to our website under the Financial Reports section of the Investor Relations tab. [Operator Instructions].
Thank you, and I will now turn the call over to Greg Lang.
Gregory S. Lang
Thank you for joining us today, and welcome to our second quarter earnings call. I'm pleased to report that the second quarter revenues were up 4% sequentially in line with our expectations. Specifically, reported net revenues of $138 million and $0.09 non-GAAP EPS. We also introduced several major new products that have been well received by our customers on a global basis. While we're pleased to see growth, we're seeing the macro environment challenge the pace of recovery in every geography and product area. In my discussions with our end customers, it's clear that the economic challenges have caused concern and uncertainty in their outlook. With the current environment at hand, we're very focused on project execution, operational efficiency and tightly managing our expenses.
As you recall from our analyst day, our business focuses on transforming networks that connect, move and store big data. Network demands have grown far beyond people making and receiving cell calls and consumers everywhere now streaming full-length movies and videos and are watching live television on billion of devices around the globe. We are convinced that the fundamentals behind our key growth drivers remain intact. We're focus on delivering these transformative products, winning the sockets that matter and positioning ourselves for great leverage as the world economy recovers and our business continues to strengthen. With this backdrop, I'll now discuss the results for Q2.
While we're pleased with the sequential growth, the mix was a bit different than we expected. Storage came in weaker than our initial expectations while our Optical business performed better than expected. At the top level, the Storage Network segment was 62% of total revenue, down from 66% in Q1; optical revenue came in at 23% of the total, up from 20% last quarter; and Mobile revenues came in at 15% of the total, up from 14% last quarter. And for those of you tracking the legacy portion of our revenue, it was 9% of our total revenue in Q2.
I'll start with the storage and market segments. Our storage business in Q2 was down about 2% versus last quarter, due to a slower Romley ramp than expected. Going forward, we expect to see growth for the balance of the year. We continue to execute well in terms of design wins and delivering new products. We were the only RAID Controller vendor to ship a PCI Express Gen 3 chip with the new Romley generation of servers and continue to be the only PCI Express Gen 3 based RAID solution in the market. For reference, PCI Gen 3 runs at 8 gig versus 5 gig for Gen 2 and delivers roughly double the performance across this critical interface.
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