Cavium Networks Inc. (CAVM) filed Quarterly Report for the period ended 2009-09-30.
CAVIUM NETWORKS is a leading provider of highly integrated semiconductor products that enable intelligent processing in networking communications storage and security applications. Cavium Networks offers a broad portfolio of integrated software compatible processors that enable secure intelligent functionality in enterprise data-center broadband/consumer and access & service provider equipment. Cavium Networks processors are supported by ecosystem partners that provide operating systems tool support reference designs and other services. Cavium Networks principal offices are in Mountain View CA with design team locations in California Massachusetts and India. Cavium Networks Inc. has a market cap of $773.5 million; its shares were traded at around $18.65 with and P/S ratio of 8.9.
Highlight of Business Operations:
arrangements totaled $133,000 and $1.2 million for the three months ended September 30, 2009 and 2008, respectively, and $1.9 million and $1.7 million for the nine months ended September 30, 2009 and 2008, respectively.
Our distributors other than Avnet are used primarily to support international sale logistics in Asia, including importation and credit management. Total net revenue through distributors was $10.6 million and $9.5 million for the three months ended September 30, 2009 and 2008, or 40.9% and 38.9% of net revenue, respectively, and $25.8 million and $22.8 million for the nine months ended September 30, 2009 and 2008, or 37.3% and 35.4% of net revenue, respectively. While we have purchase agreements with our distributors, the distributors do not have long-term contracts with any of the equipment providers. Our distributor agreements, except as noted below for Avnet, limit the distributor’s ability to return product up to a portion of purchases in the preceding quarter. Given our experience, along with our distributors’ limited contractual return rights, we believe we can reasonably estimate expected returns from our distributors. Accordingly, we recognize sales through distributors at the time of shipment, reduced by our estimate of expected returns.
Three Months and Nine Months ended September 30, 2009 Compared to the Three Months and Nine Months ended September 30, 2008: Net Revenue. Our net revenue was $25.9 million in the three months ended September 30, 2009, as compared to $24.5 million in the three months ended September 30, 2008, an increase of $1.4 million, or 5.6%. Our net revenue was $69.1 million in the nine months ended September 30, 2009, as compared to $64.4 million in the nine months ended September 30, 2008, an increase of $4.7 million, or 7.2%. The increase in net revenue in the three months and nine months ended September 30, 2009 was mainly attributable
to the increase in sales of $3.8 million and $13.2 million, respectively, in broadband and consumer markets due to increase in demand for our products from our existing and new customers combined with revenue generated from acquisitions completed in 2008. The net revenue growth in the three months and nine months ended September 30, 2009 was partially offset by sales declines of $1.0 million and $8.3 million, respectively, in the data center and access and service provider and enterprise network markets, as a result of the 2009 global economic downturn. Our net revenue from distributors in the three months and nine months ended September 30, 2009 increased by 2.0 and 1.9 percentage points, respectively, due to increased sales by most of our major distributors.
Three Months and Nine Months ended September 30, 2009 Compared to the Three Months and Nine Months ended September 30, 2008: Research and development expenses increased by $4.0 million and $12.0 million, or 61.2% and 63.7%, to $10.6 million and $30.9 million in the three months and nine months ended September 30, 2009, respectively, from $6.6 million and $18.9 million in the three months and nine months ended September 30, 2008. Of the $4.0 million and $12.0 million increase in the three months and nine months ended September 30, 2009, salaries and benefits accounted for $2.1 million and $6.7 million, respectively, and stock-based compensation expense accounted for $0.7 million and $2.2 million, respectively, in each case due to increased headcount mainly resulting from the acquisitions completed in 2008. Consulting services, amortization of intangible assets and other miscellaneous expenses accounted for $1.1 million and $2.7 million of the increase in the three months and nine months ended September 30, 2009, respectively. In addition, workforce reduction related charges of $0.2 million contributed to the overall increase in the nine months ended September 30, 2009. Research and development headcount increased to 232 at the end of September 2009 from 155 at the end of September 2008.
Three Months and Nine Months ended September 30, 2009 Compared to the Three Months and Nine Months ended September 30, 2008: Sales, general and administrative expenses increased $0.7 million and $3.4 million, or 11.8% and 21.0% to $6.6 million and $19.3 million in the three months and nine months ended September 30, 2009 from $5.9 million and $16.0 million in the three months and nine months ended September 30, 2008. Of the $0.7 million and $3.4 million increase in the three months and nine months ended September 30, 2009, stock-based compensation expense accounted for $0.5 million and $2.0 million, respectively, and salaries, benefits and commissions accounted for $0.1 million and $1.0 million, respectively, in each case due to increased headcount and higher commissions related to increases in sales. Other miscellaneous expenses accounted for $0.1 million and $0.4 million of the increase in the three months and nine months ended September 30, 2009. Sales, general and administrative headcount increased to 83 at the end of September 2009 from 71 at the end of September 2008.
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