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RadiSys Corp. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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RadiSys Corp. (RSYS) filed Quarterly Report for the period ended 2010-09-30.

Radisys Corp. has a market cap of $241.8 million; its shares were traded at around $10.02 with a P/E ratio of 30.4 and P/S ratio of 0.8. RSYS is in the portfolios of David Nierenberg of D3 Family of Funds, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the three months ended September 30, 2010, net income was $2.2 million compared to a net loss of $832,000 for the three months ended September 30, 2009. The improvement in net income was due to growth in revenue coupled with improved gross margins and lower operating expenses. Net income was $1.7 million for the nine months ended September 30, 2010 compared to a net loss of $43.0 million for the nine months ended September 30, 2009. The loss in 2009 was primarily the result of income tax expense of $42.0 million associated with the establishment of a valuation allowance for our U.S. deferred tax assets.

Cash and cash equivalents amounted to $133.3 million and $100.7 million at September 30, 2010 and December 31, 2009, respectively. The increase in cash and cash equivalents during the nine months ended September 30, 2010, was primarily driven by positive cash flows from operating activities in the amount of $19.3 million. In addition, net cash flows from the exercise of our settlement right with our investment bank, UBS, along with proceeds from calls of our auction rate securities ("ARS"), totaled $20.9 million after we paid down our line of credit with UBS. These positive cash inflows were offset by our purchase of the assets of Pactolus for $3.4 million along with capital expenditures in the amount of $3.3 million during the nine months ended September 30, 2010.

Revenues increased by $4.7 million or 6.7%, to $75.2 million in the three months ended September 30, 2010 from $70.4 million in the three months ended September 30, 2009. Revenues decreased by $8.7 million or 3.8%, to $217.5 million in the nine months ended September 30, 2010 from $226.1 million in the nine months ended September 30, 2009.

Revenues in the communications networks product group increased by $1.5 million, or 2.8%, to $55.4 million for the three months ended September 30, 2010, from $53.9 million for the three months ended September 30, 2009. For the nine months ended September 30, 2010, revenues in the communications networks product group decreased by $20.0 million, or 11.1%, to $161.2 million from $181.2 million for the same period in 2009. The decrease was driven by the maturity of our legacy/traditional communications networks products, which resulted in a decline in revenue of $7.7 million or 23.8% and $36.6 million or 34.0% for the three and nine months ended September 30, 2010, respectively, as compared with the same periods in 2009. Partially offsetting the decline was the transition to next-generation communications networks products by some of these customers. Revenues from our next-generation communications networks products increased by $9.2 million or 42.5%, in the three months ended September 30, 2010, compared to the same period in 2009. For the nine months ended September 30, 2010, revenues from our next-generation communications networks product group increased by $16.5 million or 22.5%, as compared to the same period in 2009. Increased revenues from our next-generation communications networks products were primarily driven by increased deployments during the three and nine months ended September 30, 2010.

Revenues in our commercial products group increased by $3.2 million or 19.3%, to $19.7 million for the three months ended September 30, 2010 from $16.5 million for the three months ended September 30, 2009. For the nine months ended September 30, 2010, revenues in our commercial products group increased by $11.4 million or 25.3%, to $56.3 million from $44.9 million for the nine months ended September 30, 2009. Increased revenues from the commercial products group were driven by increased medical product revenues, which increased by $1.7 million or 25.7% and $6.4 million or 35.1% for the three and nine months ended September 30, 2010, respectively, as compared to the same periods in 2009. In addition, revenues from our other commercial products category increased by $1.5 million or 14.9% and $5.0 million or 18.6% for the three and nine months ended September 30, 2010, respectively, as compared to the same periods in 2009. Revenues from medical and other commercial products grew primarily due to increased customer spending driven by an overall improvement in the economy and the healthcare sector in particular as compared to the same periods in 2009.

North America. From a geographic perspective, revenues from North America increased by $3.5 million or 16.4%, to $24.7 million for the three months ended September 30, 2010, from $21.3 million for the three months ended September 30, 2009. Revenues from North America increased by $5.8 million or 8.5%, to $74.7 million for the nine months ended September 30, 2010, from $68.9 million for the nine months ended September 30, 2009. The overall increase in revenue dollars and increase in the percentage of revenues from North America for the three and nine months ended September 30, 2010, compared to the same periods in 2009, were primarily due to an increase in North American deployments of our next-generation communications networks products as well as increased revenues from our commercial products.

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