TriQuint Semiconductor Inc. (TQNT, Financial) filed Quarterly Report for the period ended 2009-06-27.
TriQuint Semiconductor Inc. designs develops manufactures and markets a broad range of high performance analog and mixed signal integrated circuits for communications markets. The integrated circuits are incorporated into a variety of communications products including cellular phones and pagers fiber optic telecommunications equipment satellite communications systems high performance data networking products and aerospace applications. TriQuint Semiconductor Inc. has a market cap of $1.03 billion; its shares were traded at around $7.01 with a P/E ratio of 116.9 and P/S ratio of 1.8.
Revenues from the defense & aerospace market are generally for products in large scale programs with long lead-times. Once a component has been designed into an end-use product for a defense & aerospace application, the same component is generally used during the entire production life of the end-use product. Currently, we are actively engaged with multiple defense & aerospace industry contractors in the development of next-generation phased-array systems and have key design wins in major projects such as the F-35 Joint Strike Fighter (JSF) and Active Electronically Scanned Array (AESA) airborne radar. In addition, in 2005 we entered into a multi-year contract with DARPA to develop high power, wide band amplifiers in GaN. We are currently executing phase III of our DARPA GaN contract which represents approximately $16 million of revenue over 2 years. From the Office of Naval Research, we were awarded a $4.5 million, 2 year contract to advance manufacturing methods in the production of GaAs technologies. We expect to continue to win government funding for advanced technologies in the future and to participate in other large projects such as the B-2 radar upgrade. In 2008, we launched a new family of GaN power amplifier products and PowerBand, a disruptive new technology enabling wide bandwidth with output power and efficiency performance previously restricted to narrow band amplifiers. These products also have crossover application in our aerospace and networks markets. During the second quarter of 2009 we received increased contract-based revenue for research sponsored by the US government and defense industry as compared to the same period in 2008 when we saw a pause in funding between phases of a major program.
In addition, as a result of the sale of our former optoelectronics operations, we received as partial consideration $4.5 million of preferred stock in CyOptics, Inc. (CyOptics) and an unsecured promissory note from CyOptics for $5.6 million, that was discounted by $2.3 million to reflect the current market rate for similar debt of comparable companies. CyOptics paid $0.7 million towards the promissory note for the six months ended June 27, 2009 and $0.9 million for the six months ended June 28, 2008. On October 9, 2007, we participated in an additional bridge financing where we purchased $0.5 million of a subordinated convertible promissory note from CyOptics which converted into preferred stock on July 24, 2008. In December 2008, we received a letter of intent from Millennium Partners (Millennium) and signed a definitive agreement to sell the preferred stock and debt to Millennium for approximately $3.8 million, inclusive of certain purchase adjustments. On February 13, 2009, we received notice from Millennium indicating that it no longer wished to pursue completion of the purchase of our preferred stock and that it believed it had the right to purchase the note for $1.0 million. We dispute Millenniums interpretation of the agreement and do not believe any transaction with them is probable. The carrying value of the investments is $2.4 million as of June 27, 2009.
In January 2008, we made a $63.3 million dividend distribution from our Costa Rica subsidiary. Of the $63.3 million dividend, the majority was from previously taxed income with the remainder taxed in 2008 on which a deferred tax liability was established in prior years. No provision has been made for the U.S, state or additional foreign income taxes related to approximately $99.0 million of undistributed earnings of foreign subsidiaries which have been, or are, intended to be permanently reinvested.
Our revenues increased $42.1 million, or 33%, to $169.1 million in the second quarter of 2009 compared to $127.0 million in the second quarter of 2008.
Our research, development and engineering expenses for the second quarter of 2009 increased $5.8 million, or 27%, to $27.5 million, from $21.7 million in the second quarter of 2008. Research, development and engineering expenses increased primarily due to an increase in labor costs and a full quarter of WJ operations.
Read the The complete ReportTQNT is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
TriQuint Semiconductor Inc. designs develops manufactures and markets a broad range of high performance analog and mixed signal integrated circuits for communications markets. The integrated circuits are incorporated into a variety of communications products including cellular phones and pagers fiber optic telecommunications equipment satellite communications systems high performance data networking products and aerospace applications. TriQuint Semiconductor Inc. has a market cap of $1.03 billion; its shares were traded at around $7.01 with a P/E ratio of 116.9 and P/S ratio of 1.8.
Highlight of Business Operations:
We experienced 33% overall revenue growth in the second quarter of 2009 compared to the second quarter of 2008, lead by handset growth of 77% and defense & aerospace growth of 41%. The handset growth is primarily attributable to strong growth in 3G and EDGE product revenues with an increase of 195% for the second quarter of 2009 compared to 2008. We produce a highly integrated transmit modules built using our copper flip interconnect technology which allows us to build small, robust and power efficient solutions. The current demand for increased RF content required for the higher data rates and increased functionality of 3G handset devices has allowed average selling prices to stabilize. Our opportunity in a 3G phone, which is quad band capable in the GPRS/GSM/EDGE mode and supports 3 bands in the wideband code division multiple access (WCDMA) mode, is $6.00 to $8.00 per unit. By comparison, our content for a low cost dual-band GSM/GPRS phone is $0.90 to $1.50 per unit. Typical functional price erosion is 10-15% per year, offset by increasing content. We believe the fundamental drivers of continued long-term growth in the handset market remain solid as the number of new users in developed countries grows and existing users are adopting 3G enabled handsets that offer additional features and functionality compared to a traditional 2G handset. These more sophisticated handsets, sometimes called Smartphones, which incorporate a variety of features, and offer wireless broadband access enabled by 3G technologies, represent one of the fastest growing portions of the handset market. This transition to more sophisticated handsets increases the RF content in each device, increasing our addressable market. Further, China, India and other emerging countries with improving economies are growing the traditional 2G as well as the new 3G market by introducing a new customer base. In the past, however, during times of growing demand we have also experienced significant selling price pressure on some of our highest volume products.Revenues from the defense & aerospace market are generally for products in large scale programs with long lead-times. Once a component has been designed into an end-use product for a defense & aerospace application, the same component is generally used during the entire production life of the end-use product. Currently, we are actively engaged with multiple defense & aerospace industry contractors in the development of next-generation phased-array systems and have key design wins in major projects such as the F-35 Joint Strike Fighter (JSF) and Active Electronically Scanned Array (AESA) airborne radar. In addition, in 2005 we entered into a multi-year contract with DARPA to develop high power, wide band amplifiers in GaN. We are currently executing phase III of our DARPA GaN contract which represents approximately $16 million of revenue over 2 years. From the Office of Naval Research, we were awarded a $4.5 million, 2 year contract to advance manufacturing methods in the production of GaAs technologies. We expect to continue to win government funding for advanced technologies in the future and to participate in other large projects such as the B-2 radar upgrade. In 2008, we launched a new family of GaN power amplifier products and PowerBand, a disruptive new technology enabling wide bandwidth with output power and efficiency performance previously restricted to narrow band amplifiers. These products also have crossover application in our aerospace and networks markets. During the second quarter of 2009 we received increased contract-based revenue for research sponsored by the US government and defense industry as compared to the same period in 2008 when we saw a pause in funding between phases of a major program.
In addition, as a result of the sale of our former optoelectronics operations, we received as partial consideration $4.5 million of preferred stock in CyOptics, Inc. (CyOptics) and an unsecured promissory note from CyOptics for $5.6 million, that was discounted by $2.3 million to reflect the current market rate for similar debt of comparable companies. CyOptics paid $0.7 million towards the promissory note for the six months ended June 27, 2009 and $0.9 million for the six months ended June 28, 2008. On October 9, 2007, we participated in an additional bridge financing where we purchased $0.5 million of a subordinated convertible promissory note from CyOptics which converted into preferred stock on July 24, 2008. In December 2008, we received a letter of intent from Millennium Partners (Millennium) and signed a definitive agreement to sell the preferred stock and debt to Millennium for approximately $3.8 million, inclusive of certain purchase adjustments. On February 13, 2009, we received notice from Millennium indicating that it no longer wished to pursue completion of the purchase of our preferred stock and that it believed it had the right to purchase the note for $1.0 million. We dispute Millenniums interpretation of the agreement and do not believe any transaction with them is probable. The carrying value of the investments is $2.4 million as of June 27, 2009.
In January 2008, we made a $63.3 million dividend distribution from our Costa Rica subsidiary. Of the $63.3 million dividend, the majority was from previously taxed income with the remainder taxed in 2008 on which a deferred tax liability was established in prior years. No provision has been made for the U.S, state or additional foreign income taxes related to approximately $99.0 million of undistributed earnings of foreign subsidiaries which have been, or are, intended to be permanently reinvested.
Our revenues increased $42.1 million, or 33%, to $169.1 million in the second quarter of 2009 compared to $127.0 million in the second quarter of 2008.
Our research, development and engineering expenses for the second quarter of 2009 increased $5.8 million, or 27%, to $27.5 million, from $21.7 million in the second quarter of 2008. Research, development and engineering expenses increased primarily due to an increase in labor costs and a full quarter of WJ operations.
Read the The complete ReportTQNT is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
