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Trident Microsystems Inc. Reports Operating Results (10-Q)

November 08, 2010 | About:
10qk

10qk

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Trident Microsystems Inc. (TRID) filed Quarterly Report for the period ended 2010-09-30.

Trident Microsystems Inc. has a market cap of $335.71 million; its shares were traded at around $1.9 with and P/S ratio of 4.43. TRID is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

On May 14, 2009, we completed our acquisition of selected assets of the frame rate converter, or FRC, demodulator, or DRX, and audio decoder product lines from Micronas Semiconductor Holding AG, or Micronas, a Swiss corporation. In connection with the acquisition, we issued 7.0 million shares of our common stock and warrants to acquire up to 3.0 million additional shares of our common stock, with a combined fair value of approximately $12.1 million, and incurred approximately $5.2 million of acquisition-related transaction costs and liabilities, for a total purchase price of approximately $17.3 million. In connection with the acquisition, we established three new subsidiaries in Europe, Trident Microsystems (Europe) GmbH, or TMEU, Trident Microsystems Nederland B.V., or TMNM, and Trident Microsystems Holding B.V., or TMH, to primarily provide sales liaison, marketing and engineering services in Europe. TMEU is located in Freiburg, Germany and TMNM and TMH are located in Nijmegen, The Netherlands.

Revenues for the third quarter ended September 30, 2010 increased to $176.6 million, which compares with $171.7 million in the second quarter ended June 30, 2010 and $31.1 million in the quarter ended September 30, 2009. Third quarter revenues increased over the prior sequential quarter as a result of increased sales of our products for set top box and TV. Third quarter revenues increased over the comparable period one year ago primarily as a result of revenue contributions from the acquired NXP products. In addition, in 2010 we have generated incremental sales of our TV solution to our largest customer as a result of a design win awarded in late 2009.

Net loss for the third quarter was $17.5 million, or $0.10 per share. This compares with a net loss of $48.8 million, or $0.28 per share, in the prior sequential quarter and a net loss of $17.2 million, or $0.25 per share, in the quarter ended September 30, 2009. The reduced loss compared with the prior sequential quarter is primarily the result of improved gross margins related to a better mix of products, reduced amortization of intangible assets, and significantly lower operating expenses, particularly costs related to transitional support services from NXP.

We ended the third quarter of 2010 with cash and cash equivalents of $102.7 million, consisting of cash and money market funds invested in U.S. treasuries. Our cash and cash equivalents increased from the second quarter by $6.7 million.

Gross profit dollars were impacted by intangible asset amortization expense of $13.7 million or 8% of net revenues and $44.3 million or 10% of net revenues for the three and nine months ended September 30, 2010, respectively. Gross profit dollars were also impacted by transition service costs consisting principally of personnel and facilities provided by NXP. The transition service expense was $0.7 million and $2.4 million for the three and nine months ended September 30, 2010, respectively.

Research and development expenses increased for the three and nine months ended September 30, 2010, compared to the same periods last year, primarily due to significant increases in headcount resulting from the February 8, 2010, acquisition from NXP of the television systems and set-top box business lines. As a result of these activities, we incurred $16.0 million and $47.7 million of additional headcount related costs for the three and nine months ended September 30, 2010, respectively, that was not incurred in the comparable periods last year. Also as a result of these activities, during the three and nine months ended September 30, 2010, we incurred $2.7 million and $8.4 million of additional depreciation and amortization expense, respectively, not incurred in the same periods last year. Research and development expenses also included $3.0 million and $16.1 million of additional transition service costs during the three and nine months ended September 30, 2010, respectively that were not incurred during the same periods last year. These transition service costs consisted principally of personnel and facilities provided by NXP. Research and development expenses also included $1.8 million and $2.9 million of additional mask tooling costs for the three and nine months ended September 30, 2010, respectively, that were not incurred during the same periods last year.

Read the The complete Report

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10qk
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