PMC Sierra Inc. Reports Operating Results (10-Q)
Pmc Sierra Inc. has a market cap of $1.42 billion; its shares were traded at around $6.06 with a P/E ratio of 11.4 and P/S ratio of 2.2. Pmc Sierra Inc. had an annual average earning growth of 40% over the past 5 years.
Highlight of Business Operations:Storage represented 60% of our net revenues in the third quarter of 2011, an increase of 10% compared to the same quarter in 2010. The increase was primarily due to higher volumes shipped of our 6Gb/s Serial Attached SCSI (SAS) with the continued production ramp and as customers continue to migrate from 3G to 6G platforms. This increase was partially offset by declines in volumes of our laser printer products. Sequentially, our net revenues from Storage increased 6% relative to the second quarter of 2011. We saw growth in SAS products as our leading SAS design win position continues its production ramp. We also experienced growth in Fibre Channel, data center and channel sales.
Optical represented 24% of our net revenues in the third quarter of 2011, a decrease of 20% compared to the same quarter in 2010. This is reflective of current end market weakness in the areas of metro and access as Asia customers worked through existing inventories and OEM customers built out their networks at lower rates than compared to the same quarter in 2010. This decrease was partially offset by growth in Optical Transport Network (OTN) sales volumes. Sequentially, our net revenues from Optical decreased 9% relative to the second quarter of 2011 also due to the same market factors noted above.
Mobile represented 16% our net revenues for the third quarter of 2011, an increase of 78% compared to the same quarter in 2010. This increase was mainly due to our acquisition of Wintegra in November 2010. Sequentially, our net revenues from Mobile increased 3% relative to the second quarter of 2011, which was due to growth in Wintegra processor sales, partially offset by decline in some T1/E1 product volumes.
Overall net revenues for the first nine months of 2011 increased $26 million or 5%, compared to the first nine months of 2010. On a year over year basis, net revenues generated from our product offerings in Storage, Optical and Mobile increased (decreased) by 13%, (21%), and 48%, respectively.
Total gross profit increased by $14.4 million in the first nine months of 2011 compared to the same period in 2010 and gross profit as a percentage of net revenues decreased by 1% to 67% from 68%. The decrease is due to $9 million of fair value adjustments related to inventory acquired from Wintegra in November 2010 and sold during the first three months of 2011. As a result, gross profit as a percentage of net revenues for the first nine months of 2011 would have been 69% had it not been for this item. Other than the effect of purchase accounting, the underlying increase in gross profit is primarily due to product mix.
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