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Ikanos Communications Inc. Reports Operating Results (10-K)

February 23, 2012 | About:
10qk

10qk

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Ikanos Communications Inc. (IKAN) filed Annual Report for the period ended 2012-01-01.

Ikanos Comm Inc has a market cap of $58.5 million; its shares were traded at around $0.75 with and P/S ratio of 0.4.

Highlight of Business Operations:

During 2011 Sagemcom Tunisie and Paltek Corporation accounted for 20% and 10% of revenue, respectively. While in 2010 Alcatel Lucent and Sagemcom Tunisie accounted for 18% and 15% of revenue, respectively. Finally in 2009, Sagemcom Tunisie accounted for 19% of revenue, Paltek Corporation accounted for 12%, and NEC Corporation accounted for 11%. Historically, substantially all of our sales have been to customers outside the United States. Sales to customers in Asia accounted for 62% of revenue in 2011, 60% in 2010, and 58% in 2009. Sales to customers in Europe accounted for 36% of revenue in 2011, 37% in 2010, and 34% in 2009.

We incurred a net loss of $7.5 million for the year ended January 1, 2012 and had an accumulated deficit of $278.1 million as of January 1, 2012. To achieve consistent profitability, we will need to generate and sustain higher revenue, while maintaining cost and expense levels appropriate and necessary for our business. While we believe that we have the cash necessary to fund our operations for the next twelve months, we may also seek additional financing as deemed appropriate to support future company needs and investments. Future capital requirements will depend upon many factors including our rate of revenue growth, our ability to develop future revenue streams, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, the costs to ensure access to adequate manufacturing capacity and the continuing market acceptance of its products.

increased substantially on a revenue dollar basis. Asian sales increased 53% from $75.6 million in 2009 to $115.4 million in 2010. Sales into greater China (including the Peoples Republic of China and Hong Kong) more than doubled in 2010 versus 2009. Sales to Japan were marginally lower in 2010 compared to 2009. Asian sales volume, especially to China, increased substantially while average Asian selling price, including the effects of changes in mix, increased slightly. European revenue increased by 62% from $43.9 million to $70.9 million as sales into France (via Tunisia) and the Netherlands were somewhat offset by lower sales into Italy and Belgium. Revenue declined from $55.6 million in the second quarter of 2010 to $41.5 million and $37.1 million in the third and fourth quarters of 2010, respectively. The BBA-acquired products, which started to mature during the second half of 2010, contributed to the majority of the declines with decreases in product revenues of $9.1 million and $8.3 million during the 2010 third and fourth quarters, respectively.

Gross margin remained relatively flat ending with 34% in 2010 as compared to 35% in 2009. The margin for 2010 was negatively impacted by $16.8 million writedown of inventory and a $1.5 million amortization of the fair market of inventory acquired in 2009 BBA product line acquisition. While the margin for 2009 was adversely affected by a lower margin product mix as compared to 2010 revenue and $7.5 million amortization of the fair market value of inventory acquired in 2009 BBA product line acquisition, offset with a $1.6 million of previously written down inventory.

We believe that our existing cash, cash equivalents and short-term investments will be sufficient to meet our anticipated cash needs for at least the next twelve months. However, we may require additional cash resources during 2012 as a result of changes in our business conditions. Our future capital requirements will depend on many factors including our rate of revenue growth, our ability to develop future revenue streams, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, the costs to ensure access to adequate manufacturing capacity and the continuing market acceptance of our products. Additionally in the future, we may become party to agreements with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, which could also require us to seek additional equity or debt financing. The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders. Additional debt would result in increased interest expenses and could result in covenants that would restrict our operations. We have not made arrangements to obtain additional financing, and there is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all.

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