Mindspeed Technologies Inc. has a market cap of $227 million; its shares were traded at around $6.51 with and P/S ratio of 1.4.
Highlight of Business Operations:Our products are components of network infrastructure equipment. As a result, we rely on network infrastructure OEMs to select our products from among alternative offerings to be designed into their equipment. These design wins are an integral part of the long sales cycle for our products. Our customers may need six months or longer to test and evaluate our products and an additional six months or more to begin volume production of equipment that incorporates our products. We believe our close relationships with leading network infrastructure OEMs facilitate early adoption of our products during development of their products, enhance our ability to obtain design wins and encourage adoption of our technology by the industry. We believe our diverse portfolio of semiconductor solutions
The accounting policies that have the greatest impact on our financial condition and results of operations and that require the most judgment are those relating to revenue recognition, inventories, stock-based compensation, deferred income taxes and uncertain tax positions, and impairment of long-lived assets. These policies are described in further detail in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011. There have been no significant changes in our critical accounting policies and estimates during the fiscal quarter ended December 30, 2011 as compared to what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.
The decrease in our net revenue for the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 was due to lower sales volumes for our communications convergence processing products, WAN communications products and lower intellectual property revenue. These decreases were partially offset by an increase in demand for our high-performance analog products. Net revenue from our communications convergence processing products decreased in the first quarter of fiscal 2012 when compared to the first quarter of fiscal 2011 due to a decrease in net revenue from a slowdown in 3G investments, which resulted in fewer shipments of wireless media gateways used in terminating calls between the public switch telephone network (PTSN) and mobile networks. This decrease was partially offset by an increase in shipments of CPE products, which are used in broadband CPE gateways and other equipment that service providers are deploying in order to deliver voice, data and video services to residential subscribers. Net revenue from high-performance analog products increased in the first quarter of fiscal 2012 when compared to the first quarter of fiscal 2011 due to increased demand for physical media devices, which are primarily used in equipment for fiber-to-the-premise deployments. This increase was partially offset by a decrease in demand for crosspoint switches and signal conditioners. Net revenue from WAN communications products decreased in the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 due to a slowdown in demand at several large customers, particularly in legacy ATM-based systems. WAN communications products represent a legacy business for us, as we have shifted almost all of our research and development investment into our two growth businesses of communications convergence processing products and high-performance analog products. Net revenue from intellectual property licensing and sales decreased in the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 due to the timing of intellectual property sales. We have developed and maintain a broad intellectual property portfolio, and we may periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our patents.
Gross margin decreased for the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 due to both a $4.2 million, or 11%, decrease in product revenue, and a $2.4 million decrease in intellectual property revenue. The decrease in our gross margin as a percent of net revenue for the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011 was driven primarily by a change in product mix, as well as a decrease in intellectual property revenue, which has little associated cost.
We believe that our existing cash balances, along with cash expected to be generated from product sales will be sufficient to fund our operations, research and development efforts, anticipated capital expenditures, working capital and other financing requirements, including interest payments on debt obligations, for the next 12 months. We have no principal payments on currently outstanding debt due in the next 12 months. From time to time, we may acquire our debt securities through privately negotiated transactions, tender offers, exchange offers (for new debt or other securities), redemptions or otherwise, upon such terms and at such prices as we may determine appropriate. We will need to continue a focused program of capital expenditures to meet our research and development and corporate requirements. We may also consider acquisition opportunities to extend our technology portfolio and design expertise and to expand our product offerings. In order to fund capital expenditures, increase our working capital, re-pay debt or complete any acquisitions, we may seek to obtain additional debt or equity financing. We may also need to seek to obtain additional debt or equity financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than anticipated or if we fail to achieve anticipated revenue and expense levels. However, we cannot assure you that such financing will be available to us on favorable terms, or at all, particularly in light of recent economic conditions in the capital markets.
Read the The complete Report