GSI Technology (GSIT, Financial) filed Quarterly Report for the period ended 2010-12-31.
Gsi Technology has a market cap of $261.5 million; its shares were traded at around $9.37 with a P/E ratio of 13.9 and P/S ratio of 3.8. Hedge Fund Gurus that owns GSIT: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns GSIT: Chuck Royce of Royce& Associates.
Cost of Revenues. Cost of revenues increased by 42.1% from $9.9 million in the three months ended December 31, 2009 to $14.1 million in the three months ended December 31, 2010 and by 55.3% from $26.3 million in the nine months ended December 31, 2009 to $40.8 million in the nine months ended December 31, 2010. These increases were due to the corresponding increases in net revenues. Cost of revenues included stock-based compensation expense of $60,000 and $74,000, respectively, for the three months ended December 31, 2010 and 2009 and $236,000 and $216,000, respectively, for the nine months ended December 31, 2010 and 2009.
Research and Development Expenses. Research and development expenses increased 12.7% from $2.3 million in the three months ended December 31, 2009 to $2.6 million in the three months ended December 31, 2010. This increase was primarily due to an increase of $247,000 in research and development mask expense and lesser increases in repair and maintenance expense and facility related expenses. Research and development expenses included stock-based compensation expense of $208,000 and $204,000, respectively, for the three months ended December 31, 2010 and 2009. Research and development expenses increased 20.6% from $6.7 million in the nine months ended December 31, 2009 to $8.0 million in the nine months ended December 31, 2010. This increase was primarily due to increases of $534,000 in payroll related expenses, $217,000 in facility related expenses, $152,000 in software maintenance expense, $142,000 in depreciation expense and a lesser increase in stock-based compensation expense. The increases in payroll expenses were related to increases in headcount to support our low latency DRAM project and various high speed SRAM projects. Research and development expenses included stock-based compensation expense of $622,000 and $496,000, respectively, for the nine months ended December 31, 2010 and 2009.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.8 million in the three months ended December 31, 2009 and December 31, 2010. Increases in independent sales representative commissions and payroll related expenses were primarily offset by decreases in professional fees and outside consulting fees. Selling, general and administrative expenses included stock-based compensation expense of $160,000 and $133,000, respectively, for the three months ended December 31, 2010 and 2009. Selling, general and administrative expenses increased 15.5% from $7.1 million in the nine months ended December 31, 2009 to $8.3 million in the nine months ended December 31, 2010. This increase was primarily related to increases of $665,000 in commissions for our independent sales representatives and $316,000 in payroll-related expenses, partially offset by a decrease in outside consulting expenses and professional fees. Selling, general and administrative expenses included stock-based compensation expense of $446,000 and $372,000, respectively, for the nine months ended December 31, 2010 and 2009.
Interest and Other Income (Expense), Net. Interest and other income (expense), net decreased from income of $198,000 in the three months ended December 31, 2009 to a loss of $48,000 in the three months ended December 31, 2010 and decreased 88.2% from $1.8 million in the nine months ended December 31, 2009 to $216,000 in the nine months ended December 31, 2010. The decrease in the nine month period was primarily the result of a $1.1 million bargain purchase gain resulting from our acquisition of the Sony SRAM memory device product line in the quarter ended September 30, 2009, partially offset by decreases in interest income due to lower interest rates received on our cash, short-term and long-term investments. In addition, we experienced an exchange gain of $5,000 in the three months ended December 31, 2009 compared to an exchange loss of $218,000 in the three months ended December 31, 2010 and an exchange loss of $8,000 in the nine months ended December 31, 2009 compared to an exchange loss of $308,000 in the nine months ended December 31, 2010, all related to our Taiwan branch operations.
Net cash provided by operating activities was $10.9 million for the nine months ended December 31, 2010 compared to $6.9 million for the nine months ended December 31, 2009. The primary sources of cash in the current nine month period were net income of $15.5 million, an increase in deferred revenue of $1.3 million and an increase in accounts payable of $1.0 million, partially offset by an increase in inventory of $8.2 million and an increase in accounts receivable of $2.6 million. Deferred revenue increased as a result of our distributors increasing the levels of inventory in their possession to better enable them to respond to their customers requirements. The increase in accounts receivable is a result of the higher level of shipments in the quarter ended December 31, 2010 compared to the quarter ended March 31, 2010. Inventory levels increased as a result of a planned inventory build-up to enable us to better respond to current and forecasted customer requirements.
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Gsi Technology has a market cap of $261.5 million; its shares were traded at around $9.37 with a P/E ratio of 13.9 and P/S ratio of 3.8. Hedge Fund Gurus that owns GSIT: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns GSIT: Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Net Revenues. Net revenues increased by 50.6% from $17.4 million in the three months ended December 31, 2009 to $26.2 million in the three months ended December 31, 2010. Net revenues increased by 63.9% from $46.3 million in the nine months ended December 31, 2009 to $75.9 million in the nine months ended December 31, 2010. As expected, net revenues for the third quarter declined slightly from $26.7 million in the second quarter, although they were somewhat higher than originally anticipated due to higher than expected levels of shipments to our largest customers contract manufacturers during the third quarter, some of which were a result of contractually required consignment hub pulls by the customers contract manufacturers, indicating draw-downs from consignment inventory in advance of the customers actual manufacturing requirements. The slowdown in business for this customer that we had expected in our third quarter now appears to have been pushed out to our fourth quarter, and this anticipated slowdown is expected to result in a sequential decline in fourth quarter revenues. Direct and indirect sales to Cisco Systems, our largest customer, increased by $3.1 million from $6.7 million in the three months ended December 31, 2009 to $9.8 million in the three months ended December 31, 2010 and by $14.6 million from $14.7 million in the nine months ended December 31, 2009 to $29.3 million in the nine months ended December 31, 2010. Net revenues in the three months and nine months ended December 31, 2010 included $4.0 million and $10.7 million, respectively, from the sale to Cisco Systems of products acquired in our August 28, 2009 acquisition of the Sony SRAM memory device product line, compared to $1.9 million and $2.2 million, respectively, in the three and nine month periods ended December 31, 2009. In addition to the increase in sales to Cisco Systems, net revenues benefited from the continued acceptance of our SigmaQuad product line which resulted in a 197.1% increase in SigmaQuad shipments in the nine months ended December 31, 2010 compared to the nine months ended December 31, 2009, accounting for 31.3% of total shipments in the nine months ended December 31, 2010.Cost of Revenues. Cost of revenues increased by 42.1% from $9.9 million in the three months ended December 31, 2009 to $14.1 million in the three months ended December 31, 2010 and by 55.3% from $26.3 million in the nine months ended December 31, 2009 to $40.8 million in the nine months ended December 31, 2010. These increases were due to the corresponding increases in net revenues. Cost of revenues included stock-based compensation expense of $60,000 and $74,000, respectively, for the three months ended December 31, 2010 and 2009 and $236,000 and $216,000, respectively, for the nine months ended December 31, 2010 and 2009.
Research and Development Expenses. Research and development expenses increased 12.7% from $2.3 million in the three months ended December 31, 2009 to $2.6 million in the three months ended December 31, 2010. This increase was primarily due to an increase of $247,000 in research and development mask expense and lesser increases in repair and maintenance expense and facility related expenses. Research and development expenses included stock-based compensation expense of $208,000 and $204,000, respectively, for the three months ended December 31, 2010 and 2009. Research and development expenses increased 20.6% from $6.7 million in the nine months ended December 31, 2009 to $8.0 million in the nine months ended December 31, 2010. This increase was primarily due to increases of $534,000 in payroll related expenses, $217,000 in facility related expenses, $152,000 in software maintenance expense, $142,000 in depreciation expense and a lesser increase in stock-based compensation expense. The increases in payroll expenses were related to increases in headcount to support our low latency DRAM project and various high speed SRAM projects. Research and development expenses included stock-based compensation expense of $622,000 and $496,000, respectively, for the nine months ended December 31, 2010 and 2009.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.8 million in the three months ended December 31, 2009 and December 31, 2010. Increases in independent sales representative commissions and payroll related expenses were primarily offset by decreases in professional fees and outside consulting fees. Selling, general and administrative expenses included stock-based compensation expense of $160,000 and $133,000, respectively, for the three months ended December 31, 2010 and 2009. Selling, general and administrative expenses increased 15.5% from $7.1 million in the nine months ended December 31, 2009 to $8.3 million in the nine months ended December 31, 2010. This increase was primarily related to increases of $665,000 in commissions for our independent sales representatives and $316,000 in payroll-related expenses, partially offset by a decrease in outside consulting expenses and professional fees. Selling, general and administrative expenses included stock-based compensation expense of $446,000 and $372,000, respectively, for the nine months ended December 31, 2010 and 2009.
Interest and Other Income (Expense), Net. Interest and other income (expense), net decreased from income of $198,000 in the three months ended December 31, 2009 to a loss of $48,000 in the three months ended December 31, 2010 and decreased 88.2% from $1.8 million in the nine months ended December 31, 2009 to $216,000 in the nine months ended December 31, 2010. The decrease in the nine month period was primarily the result of a $1.1 million bargain purchase gain resulting from our acquisition of the Sony SRAM memory device product line in the quarter ended September 30, 2009, partially offset by decreases in interest income due to lower interest rates received on our cash, short-term and long-term investments. In addition, we experienced an exchange gain of $5,000 in the three months ended December 31, 2009 compared to an exchange loss of $218,000 in the three months ended December 31, 2010 and an exchange loss of $8,000 in the nine months ended December 31, 2009 compared to an exchange loss of $308,000 in the nine months ended December 31, 2010, all related to our Taiwan branch operations.
Net cash provided by operating activities was $10.9 million for the nine months ended December 31, 2010 compared to $6.9 million for the nine months ended December 31, 2009. The primary sources of cash in the current nine month period were net income of $15.5 million, an increase in deferred revenue of $1.3 million and an increase in accounts payable of $1.0 million, partially offset by an increase in inventory of $8.2 million and an increase in accounts receivable of $2.6 million. Deferred revenue increased as a result of our distributors increasing the levels of inventory in their possession to better enable them to respond to their customers requirements. The increase in accounts receivable is a result of the higher level of shipments in the quarter ended December 31, 2010 compared to the quarter ended March 31, 2010. Inventory levels increased as a result of a planned inventory build-up to enable us to better respond to current and forecasted customer requirements.
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