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Entropic Communications Reports Second Quarter Results
Conference Call to be Webcast Today at 2:00 p.m. Pacific Time

SAN DIEGO, Jul 28, 2010 (GlobeNewswire via COMTEX News Network) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon and software solutions to enable connected home entertainment, today reported its second quarter results for the period ended June 30, 2010. Entropic reported second quarter net revenues of $40.7 million, an increase of 9 percent compared with $37.5 million in the first quarter of 2010 and an increase of 56 percent compared to $26.1 million in the second quarter of 2009.

In accordance with U.S. generally accepted accounting principles (GAAP), the company's second quarter net income was $3.1 million, or $0.04 per share. This compares with GAAP net income of $1.8 million, or $0.02 per share in the first quarter of 2010. Non-GAAP net income in the second quarter was $6.1 million, or $0.08 per share, compared to non-GAAP net income of $4.4 million, or $0.06 per share in the first quarter of 2010.

"Entropic recorded its fifth consecutive quarter of revenue growth and posted record net income and earnings per share for the quarter," said Patrick Henry, president and chief executive officer of Entropic Communications. "During the quarter we benefitted from increasing adoption of our MoCA home networking products by multiple Pay-TV service providers as well as a solid ramp in our solutions for the direct broadcast satellite market. We have significantly expanded our served available market, diversified our revenue base, and have a healthy design win pipeline -- based on new consumer market drivers -- to position the company for continued revenue and earnings growth."

                                           Three months ended
                                         ----------------------
                                          June    Mar.   June
                                          30,     31,     30,
  (In millions, except per share data)    2010    2010   2009
  Net revenues(1)                         $40.7  $37.5    $26.1
  GAAP net income (loss)                   $3.1   $1.8   ($4.3)
  GAAP net income (loss) per share
  (basic and diluted)                     $0.04  $0.02  ($0.06)

  Non-GAAP net income (loss)(1)            $6.1   $4.4   ($0.7)
  Non-GAAP net income (loss) per
   share(1)
  (basic and diluted)                     $0.08  $0.06  ($0.01)

  (1) Please refer to "Non-GAAP Financial Measures" below and
   the financial statements portion of this press release for
   an explanation of the non-GAAP financial measures contained
   in the table above and a reconciliation of such measures to
   the comparable GAAP financial measures.

Recent Highlights

  --  Announced that Dr. Michael Farese joined the company as Senior Vice
      President, Engineering and Operations to guide Entropic's global
      engineering and operations organizations, including product development,
      program management, quality, technical operations, and supply
      management.

  --  Participated in the ratification of the MoCA 2.0 specification, ensuring
      service providers and original equipment manufacturers can capitalize on
      their MoCA investments through backward compatibility with current MoCA
      1.1/1.0 products. As a founding member and original architect of the
      MoCA standard, Entropic is proud to be part of the industry standards
      body which is establishing and delivering higher reliability and
      performance benchmarks, as compared to other connectivity options
      available for the distribution of whole-home video and other multimedia
      entertainment over coaxial cable.

  --  Announced that Tom Lookabaugh, the company's Chief Technology Officer,
      was named a finalist for the San Diego Business Journal's IT Executive
      of the Year award.

  --  Ranked #1 with a 32% share in worldwide revenue of the top 4 vendors of
      home networking and access application specific standard products
      (ASSPs) according to The Linley Group's "Communications Semiconductor
      Market Share 2009," released in June 2010.

  --  Announced that Entropic's Channel Stacking Switch technology is designed
      into the Microelectronics Technology Inc. (MTI) low-noise block
      converter (LNB) single cable technology products, currently being
      deployed by a major Italian satellite service provider.

  --  Filed a shelf registration statement with the Securities and Exchange
      Commission (SEC) covering the offer and sale of up to $100 million of
      securities which may include common stock, preferred stock, debt
      securities, warrants or any combination of the foregoing.  The terms of
      any offering under this shelf registration statement will be determined
      at the time of the offering and disclosed in a prospectus supplement
      filed with the SEC. The company has no immediate plans or current
      commitments to sell securities.


For More Information

Entropic management will be holding a conference call today, July 28, 2010, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company's results for the second quarter of fiscal 2010 and to provide guidance for the third quarter. You may access the conference call via any of the following:

  Teleconference:       631-813-4729

  Conference ID:        84657891

                        http://ir.entropi
  Web Broadcast:        c.com/events.cfm

  Replay:               706-645-9291

About Entropic Communications

Entropic Communications, Inc. (Nasdaq:ENTR) is a leading fabless semiconductor company that is engineering the future of connected home networking and entertainment by providing next-generation silicon and software technologies to the world's leading cable, telecommunications and satellite service providers, OEMs and consumer electronic manufacturers. As a co-founder of MoCA (Multimedia over Coax Alliance), Entropic pioneered and continues to evolve the way high-definition television-quality video and other multimedia and digital content such as movies, music, games and photos are brought into and delivered throughout the home. For more information, visit Entropic at www.entropic.com.

The Entropic Communications logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4255

Non-GAAP Financial Measures

This press release and the accompanying tables contain the following non-GAAP financial measures: net income (loss) and net income (loss) per share. These non-GAAP financial measures exclude the effects on the Statement of Operations of, among others, all forms of stock-based compensation, non-cash acquired intangibles amortization and impairment charges, and restructuring charges, and their related effects on the number of diluted shares used in calculating non-GAAP income (loss) per share.

Management uses these non-GAAP financial measures to manage the company's business, including setting operating budgets and executive compensation plans. These non-GAAP measures are also used to (i) supplement the financial results and forecasts reported to the company's board of directors, (ii) evaluate the company's operating performance, (iii) compare the company's performance to internal forecasts, and (iv) manage the company's business and benchmarking performance internally. The non-GAAP measures have been made available to stockholders consistently in the past to provide transparency on how management manages the company's operating performance. Management believes that these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP measures, in evaluating the company's ongoing operational performance.

The non-GAAP financial measures disclosed by the company should not be considered in isolation or a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Forward-Looking Statements

Statements in this press release that are not strictly historical in nature constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding our expectations for continued and/or future revenue, earnings and product sales growth and the factors that may contribute to such growth, and our belief that, following the ratification of the MoCA 2.0 specification, service providers and original equipment manufacturers will be able to capitalize on their MoCA investments through backward compatibility with current MoCA 1.1/1.0 products. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Entropic's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, our dependence on a limited number of customers and service providers for a substantial portion of our revenues; risks that the market for HD and SD video and other multi-media content delivery and networking solutions in the United States, China and elsewhere will not develop as we expect; risks associated with competing against larger and more established companies and our ability to compete successfully in the market for MoCA-compliant chipsets; risks associated with timely development and introduction of new or enhanced products; risks that our collaborations and partnerships will not yield their anticipated benefits; risks associated with adverse U.S. and international economic conditions; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.

Shelf Registration Statement

A shelf registration statement relating to Entropic's common stock, preferred stock, debt securities, warrants or any combination of the foregoing has been filed by Entropic with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Entropic Communications(R) and the stylized Entropic "curve" logo are either trademarks or registered trademarks of Entropic Communications, Inc. in the United States and/or other countries.

                                     ENTROPIC COMMUNICATIONS, INC.
                         GAAP Condensed Consolidated Statements of Operations
                 (In thousands, except for share information and footnote disclosures)


                                               Three Months Ended                Six Months Ended

                                       June 30,     March 31,    June 30,     June 30,     June 30,
                                         2010         2010         2009         2010         2009
                                      -----------  -----------  -----------  -----------  -----------
                                      (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited)

  Net revenues                           $ 40,680     $ 37,451     $ 26,146     $ 78,131     $ 50,269

  Cost of net revenues                     18,831       17,701       13,201       36,532       25,105
                                      -----------  -----------  -----------  -----------  -----------
  Gross profit                             21,849       19,750       12,945       41,599       25,164
  Operating expenses:
   Research and development                11,746       11,538       10,102       23,284       23,425
   Sales and marketing                      3,991        3,778        3,395        7,769        7,032
   General and administrative               3,012        2,700        2,712        5,712        5,401
   Amortization of intangibles                 --           --           --           --           16
   Restructuring charges (1)                   --           --          979           --        2,103
   Impairment of goodwill and
    intangible assets (2)                      --           --           --           --          208
                                      -----------  -----------  -----------  -----------  -----------

    Total operating expenses               18,749       18,016       17,188       36,765       38,185
                                      -----------  -----------  -----------  -----------  -----------
  Income (loss) from operations             3,100        1,734      (4,243)        4,834     (13,021)

  Other income, net                            20           25           30           45           89
                                      -----------  -----------  -----------  -----------  -----------

  Income (loss) before income taxes         3,120        1,759      (4,213)        4,879     (12,932)
                                      -----------  -----------  -----------  -----------  -----------

  Income tax provision                         28            1           74           29           91
                                      -----------  -----------  -----------  -----------  -----------

  Net income (loss)                       $ 3,092      $ 1,758    $ (4,287)      $ 4,850   $ (13,023)
                                      ===========  ===========  ===========  ===========  ===========

  Net income (loss) per share
   attributable to common
   stockholders -- basic                   $ 0.04       $ 0.02     $ (0.06)       $ 0.07     $ (0.19)
                                      ===========  ===========  ===========  ===========  ===========
  Net income (loss) per share
   attributable to common
   stockholders -- diluted                 $ 0.04       $ 0.02     $ (0.06)       $ 0.06     $ (0.19)
                                      ===========  ===========  ===========  ===========  ===========
  Weighted average number of shares
   used to compute net income (loss)
   per share -- basic                      71,972       71,322       69,424       71,621       69,113
                                      ===========  ===========  ===========  ===========  ===========
  Weighted average number of shares
   used to compute net income (loss)
   per share -- diluted                    75,616       73,989       69,424       74,777       69,113
                                      ===========  ===========  ===========  ===========  ===========


  (1) In March 2009, the Company implemented a restructuring plan to improve its operating cost
   structure which included a reduction-in-force and the closing of its France location and one of
   its Israel locations. During the three and six months ended June 30, 2009, the Company recorded
   restructuring charges of $979,000 and $2,103,000, respectively, related to the restructuring plan.

  (2) During the three months ended March 31, 2009, the Company recorded an impairment charge on
   intangible assets of $208,000. The Company determined that the intangible assets associated with
   its 2007 acquisition of Arabella Software, Ltd. were fully impaired as the developed technology
   acquired would no longer be used in its ongoing business operations.

                     ENTROPIC COMMUNICATIONS, INC.
               GAAP Condensed Consolidated Balance Sheets
                             (In thousands)

                                                             December
                                   June 30,     March 31,      31,

                                     2010         2010         2009
                                  -----------  -----------  ---------
                                  (unaudited)  (unaudited)
  ASSETS
  Current assets:
   Cash and cash equivalents         $ 41,329     $ 38,499   $ 35,252
   Accounts receivable, net            19,917       18,188     15,468
   Inventory                           23,077       17,007     16,353
   Prepaid expenses and other
    current assets                      2,772        2,542      3,302
                                  -----------  -----------  ---------
    Total current assets               87,095       76,236     70,375
  Property and equipment, net          11,706       11,334     11,581
  Intangible assets, net                  811        1,217      1,623

  Other long-term assets                  213          230        235
                                  -----------  -----------  ---------

    Total assets                     $ 99,825     $ 89,017   $ 83,814
                                  ===========  ===========  =========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
   Accounts payable                   $ 9,979      $ 6,666    $ 5,726
   Accrued payroll and benefits         3,730        3,219      3,396
   Accrued expenses and other
    current liabilities                 2,538        2,311      2,217

   Deferred revenues                      161          341        174
                                  -----------  -----------  ---------
    Total current liabilities          16,408       12,537     11,513
  Stock repurchase liability              211          297        345
  Other long-term liabilities           2,751        2,898      3,043

  Stockholders' equity                 80,455       73,285     68,913
                                  -----------  -----------  ---------
    Total liabilities and
     stockholders' equity            $ 99,825     $ 89,017   $ 83,814
                                  ===========  ===========  =========

                                     ENTROPIC COMMUNICATIONS, INC.
                            Unaudited Reconciliation of Non-GAAP Adjustments
                 (In thousands, except for share information and footnote disclosures)

  This press release contains the following non-GAAP financial measures: net income (loss) and net
   income (loss) per share. The presentation of such measures is not intended to be considered in
   isolation or as a substitute for, or superior to, the financial information prepared and presented
   in accordance with GAAP. Our non-GAAP net income (loss) and net income (loss) per share exclude the
   items listed below.

  The following table sets forth such non-GAAP measures for the applicable periods as well as the
   reconciliation of such measures to the directly comparable GAAP measures for the periods shown.



                                                Three Months Ended                Six Months Ended
                                       -------------------------------------  ------------------------

                                        June 30,     March 31,    June 30,     June 30,     June 30,
                                          2010         2010         2009         2010         2009
                                       -----------  -----------  -----------  -----------  -----------
                                       (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited)
  GAAP net income (loss)                   $ 3,092      $ 1,758    $ (4,287)      $ 4,850   $ (13,023)
  Non-GAAP adjustments:
   Stock-based compensation:
    Cost of net revenues                        89           63           45          152           61
    Research and development                 1,211        1,079          996        2,290        2,518
    Sales and marketing                        382          312          326          694          694

    General and administrative                 875          738          853        1,613        1,755
                                       -----------  -----------  -----------  -----------  -----------
     Total stock-based compensation          2,557        2,192        2,220        4,749        5,028
   Acquisition-related items:
    Amortization of intangible
     assets:
     Cost of net revenues                      405          406          405          811          811
     Operating expenses                         --           --           --           --           16
    Impairment of goodwill and
     intangible assets                          --           --           --           --          208

   Restructuring charges                        --           --          979           --        2,103
                                       -----------  -----------  -----------  -----------  -----------

   Total of non-GAAP adjustments             2,962        2,598        3,604        5,560        8,166
                                       -----------  -----------  -----------  -----------  -----------

  Non-GAAP net income (loss)               $ 6,054      $ 4,356      $ (683)     $ 10,410    $ (4,857)
                                       ===========  ===========  ===========  ===========  ===========

  GAAP weighted average shares
   (basic)                                  71,972       71,322       69,424       71,621       69,113
   Non-GAAP adjustment for dilutive
    shares (a)                               5,907        4,953           --        5,344           --
                                       -----------  -----------  -----------  -----------  -----------
  Non-GAAP weighted average shares
   (diluted)                                77,879       76,275       69,424       76,965       69,113
                                       ===========  ===========  ===========  ===========  ===========

  GAAP net income (loss) per share
   (basic)                                  $ 0.04       $ 0.02     $ (0.06)       $ 0.07     $ (0.19)
   Non-GAAP adjustments detailed
    above (a)                                 0.04         0.04         0.05         0.07         0.12
                                       -----------  -----------  -----------  -----------  -----------
  Non-GAAP net income (loss) per
   share (diluted)                          $ 0.08       $ 0.06     $ (0.01)       $ 0.14     $ (0.07)
                                       ===========  ===========  ===========  ===========  ===========

  (a) Shares included for calculating diluted earnings per share for periods with non-GAAP net income.
   For the periods shown with a net loss, no shares were included for the diluted earnings per share
   calculation, as including such shares would be antidilutive.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Entropic Communications

CONTACT:  Entropic Communications, Inc.
Investor Contact:
Debra Hart, Director, Investor Relations
858.768.3852
debra.hart@entropic.com
Ruder Finn for Entropic Communications
Media/Industry Analyst Contact:
Chris Fallon
212.715.1691
fallonc@ruderfinn.com

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