Cypress Reports Fourth-Quarter and Year-End 2013 Results

Our fourth-quarter revenue of $167.8 million was above the midpoint of our guidance, but down 11% from the $188.7 million in revenue of the prior quarter. All divisions experienced normal seasonal declines. We continued to execute very well on our operating expense management initiatives, enabling us to deliver earnings at the high end of our guidance. We thus are prepared to deliver strong operating leverage as we return to revenue growth in 2014.

We exited 2013 with a book-to-bill ratio of 1.08, a high point since the first quarter of 2012. The book-to-bill ratio of all divisions was above unity with our Programmable Systems Division leading the way at 1.15. Lead times remain low; our distributors decreased their inventories to their lowest levels in three years. As such, we expect less-than-normal seasonal revenue declines in the first quarter of 2014. Our design win pipeline for our new TrueTouch® touchscreen products is finally beginning to recover. We expect our revenue to remain in a seasonal trough in the first quarter and then to increase during the rest of 2014.

Note that we produced $167.8 million in revenue in the fourth quarter of 2013 vs. $180.3 million in the fourth quarter of 2012, down $12.5 million, but that our pretax profit was still up $7.9 million. This was due to record-low operating expenses.

BUSINESS REVIEW

+ Our non-GAAP consolidated gross margin for the fourth quarter was 51.0%, down 2.8 percentage points from the previous quarter, due primarily to reduced amortization of manufacturing expenses by lower revenue. Excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 52.3%. ETD revenue is growing rapidly (see Net Sales Summary table) and will contribute significantly to revenue growth in 2014.

+ Net inventory at the end of the fourth quarter was $100.6 million, down from the third quarter.

 
NET SALES SUMMARY
(In thousands, except percentages)
(Unaudited)
 
  THREE MONTHS ENDED

Dec. 29,

 

Sept. 29,

  Dec. 30,   Sequential   Year-over-
Business Unit 2013 2013 2012 Change Year Change
PSD 1 $ 67,746 $ 78,135 $ 81,405 -13 %

-17

%

MPD 1 $ 79,890 $ 88,743 $ 77,421 -10 % 3 %
DCD 1 $ 16,482 $ 18,884 $ 20,170 -13 % -18 %
ETD 1, 2 $ 3,658   $ 2,961   $ 1,287   24 % 184 %
Total $ 167,776   $ 188,723   $ 180,283   -11 % -7 %
 
Geographic
China and ROW 64 % 64 % 68 % 0 % -6 %
Americas 14 % 14 % 16 % 0 % -13 %
Europe 12 % 12 % 9 % 0 % 33 %
Japan   10 %   10 %   7 % 0 % 43 %
Total   100 %   100 %   100 % 0 % 0 %
 
Channel
Distribution 69 % 74 % 75 % -7 % -8 %
Direct   31 %   26 %   25 % 19 % 24 %
Total   100 %   100 %   100 % 0 % 0 %
 
 
TWELVE MONTHS ENDED

Dec. 29,

 

Dec. 30,

  Year-over-
Business Unit 2013 2012 Year Change
PSD 1 $ 292,707 $ 345,430 -15 %
MPD 1 $ 338,986 $ 330,504 3 %
DCD 1 $ 79,410 $ 86,591 -8 %
ETD 1, 2 $ 11,590   $ 7,162   62 %
Total $ 722,693   $ 769,687   -6 %
 
Geographic
China and ROW 66 % 65 % 2 %
Americas 14 % 17 % -18 %
Europe 11 % 10 % 10 %
Japan   9 %   8 % 13 %
Total   100 %   100 % 0 %
 
Channel
Distribution 73 % 74 % -1 %
Direct   27 %   26 % 4 %
Total   100 %   100 % 0 %
 
1.   PSD, Programmable Systems Division; DCD, Data Communications Division; MPD, Memory Products Division: ETD, Emerging Technology Division.
2. “Emerging Technology” includes businesses outside our core semiconductor businesses outlined in Footnote 1. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit .

FOURTH-QUARTER 2013 HIGHLIGHTS

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