23 February 2012

Anadigics’ Q4 sales down 2% as broadband constraints offset wireless growth

For full-year 2011, GaAs-based broadband wireless and wireline communications component maker Anadigics Inc of Warren, NJ, USA has reported revenue of $152.8m, down 29.5% on 2010’s $216.7m. Most recently, fourth-quarter net sales were $36.5m, down 39.4% on $60.2m a year ago. However, this was down just 2% on $37.3m in Q3/2011, despite the challenges in the global economy. The greater-than-10% customers were Samsung, ZTE, Research in Motion, and Huawei.

“Wireless business grew sequentially for the second consecutive quarter,” says president & CEO Ron Michels. Wireless revenue rose 7.3% from Q3’s $27.9m to $29.9m, driven by continued design-win success at the firm’s top three wireless customers Samsung, Huawei and ZTE. In particular, in November Anadigics announced that it was supplying power amplifiers to Samsung for its Galaxy S 4G and Galaxy SII X smartphones. The firm also expanded its family of 4G power amplifiers. 

The wireless revenue growth was offset by a decline in broadband business. Compared with Q3’s 75:25 split, the revenue split was 82% wireless and just 18% broadband. Broadband revenue was $6.6m, down 29.7% due partly to Q3’s seasonally strong $9.4m, as business was restrained by the economy, lower home building and partly impacted by slight constraints from the Thailand flood in October. Most affected was set-top box revenue, down from $2.3m to $1.8m.

Due mainly to a less favorable revenue mix and factory utilization of just 50%, gross margin has fallen from 20% in Q3 to 16.5%.

Operating expenses rose slightly from Q3’s $15.5m to $15.7m. However, the increase was “in the right place”, says VP & chief financial officer Terry Gallagher: R&D spending rose by $600,000 (6%) to $10m, as the firm continues to introduce new product offerings. Meanwhile, selling, general & administration (SG&A) expenses were cut by $300,000 (5.2%) to $5.7m, consistent with the firm’s focus on limiting expenses while funding mission-critical efforts. “We recently took action that serves to further reduce our annual SG&A cost structure by roughly $1m,” says Gallagher.

On a non-GAAP basis, compared with a profit of $4.9m a year ago, net loss has risen from $7.8m in Q3 to $9.5m in Q4. Full-year net loss was $31.7m, compared with a profit of $7.7m  in 2010.

Depreciation expense was $4.4m, resulting in a pro forma EBITDA loss of $5.3m. Capital spending was $1.6m. Hence, during Q4, cash, cash equivalents and short- and long-term marketable securities fell from $100.6m to $93.6m.

“We continued to make notable progress on new product development,” says Michels. In February Anadigics expanded its portfolio of small-cell wireless infrastructure power amplifiers, launched multimode-multiband power amplifiers (MMPAs), and unveiled its new power amplifier duplexer (PAD) family. “We have received strong customer interest in our expanding portfolio of PADs, multimode-multiband PAs, and penta-band PAs for 3G/4G applications,” Michels notes. “Our new circuit architecture for dual-band PAs gives us a strong competitive advantage that will enable us to increase our 3G/4G market penetration,” he believes. Also in Q1/2012, Anadigics announced that it is shipping production volumes of its HELP3E power amplifiers for the new Galaxy Nexus smartphone of Samsung Electronics.

“We are acutely focused on execution in 2012,” says Gallagher. “In commenting on the first quarter, we expect revenues to reflect the high end of seasonal softness [with wireless revenue down 15%] in addition to a decline in revenue from products sold to our former top customer [Research in Motion] reaching end of life,” he adds. RIM revenues have lasted longer than anticipated, says Gallagher, but the firm is not expected to be a major customer in 2012.

“As we look beyond the seasonal first quarter, our new products serving an expanded addressable market will position us for growth in second half of 2012 and beyond,” reckons Michels. Assuming a return to a revenue split of 75/25 between wireless and broadband, Anadigics expects cash flow break-even for a quarterly revenue level of about $50m.

See related items:

Anadigics’ sales rise 4.7% in Q3 to $37.3m

Anadigics’ revenue falls 18% in Q2 to $35.6m

Anadigics’ sales fall 28% in Q1 to $43.5m

Anadigics’ sales fall less-than-expected 1.7% in Q4 to $60m

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