Mindspeed Technologies Inc. (MSPD, Financial) filed Quarterly Report for the period ended 2010-04-02.
Mindspeed Technologies Inc. has a market cap of $295.9 million; its shares were traded at around $9.35 with and P/S ratio of 2.3. MSPD is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The 41% increase in our net revenues for the second quarter of fiscal 2010 compared to the comparable fiscal 2009 period mainly reflects higher sales volume in all three of our product families, partially offset by lower revenues from the sale and licensing of intellectual property. Net revenues from our multiservice access DSP products increased $5.4 million, or 50%, mainly reflecting an increase in shipments in our 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. Within multiservice access, we also experienced an increase in shipments in VoIP processors for fiber optic access, particularly to customers in China. Net revenues from our high-performance analog products increased $5.4 million, or 67%, when comparing the second quarter of fiscal 2010 to the second quarter of fiscal 2009, due primarily to an increased demand in crosspoint switches from strength in the telecommunications market in China and an increased demand for our physical media devices, which are used in equipment for fiber-to-the-premise deployments, metropolitan area networks and wide area networks. Net revenues from our WAN communications products increased $3.0 million, or 39%, in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 due primarily to the decrease in demand for our WAN products in the second quarter of fiscal 2009 resulting from weak economic conditions, particularly in the U.S. Demand subsequently increased in the second quarter of fiscal 2010, which resulted in an increase in shipments in our network processor products, our T/E carrier transmission products and our Carrier Ethernet products. Net revenues from intellectual property licensing and sales decreased $2.0 million, or 100%, because we did not recognize any intellectual property sales in the second quarter of fiscal 2010. We have developed and maintain a broad intellectual property portfolio, and we periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our patents. We recognized our first revenues from the sale of patents during the fourth quarter of fiscal 2007, and continued to recognize patent-related revenues in most of our fiscal quarters through the second quarter of fiscal 2009. Our sales of intellectual property subsequent to the second quarter of fiscal 2009 have been negatively impacted by the downturn in the economy, which has decreased the number of buyers and prices buyers are willing to pay in the intellectual property market.
For the first six months of fiscal 2010, the 30% increase in our net revenues compared to the comparable fiscal 2009 period mainly reflects higher sales volume in all three of our product families, partially offset by lower revenues from the sale and licensing of intellectual property. Net revenues from our multiservice access DSP products increased $8.5 million, or 39%, mainly reflecting an increase in shipments in our 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. Within multiservice access, we also experienced an increase in shipments in VoIP processors for fiber optic access, particularly to customers in China. Net revenues from our high-performance analog products increased $6.4 million, or 34%, when comparing the second quarter of fiscal 2010 to the second quarter of fiscal 2009 due primarily to increased demand in crosspoint switches due to strength in the telecommunications market in China and increased demand for our physical media devices, which are used in equipment for fiber-to-the-premise deployments, metropolitan area networks and wide area networks. Net revenues from our WAN communications products increased $8.1 million, or 58%, mainly reflecting the decrease in demand we saw for our WAN products in the first six months of fiscal 2009 due to weak economic conditions, particularly in the U.S. Demand subsequently increased in the first six months of fiscal 2010, which resulted in an increase in shipments mainly in our network processor products and our carrier Ethernet products. Net revenues from intellectual property licensing and sales decreased $5.0 million, or 100%, in the first six months of fiscal 2010 compared to the first six months of fiscal 2009, because we did not recognize any intellectual property sales in the first six months of fiscal 2010. We have developed and maintain a broad intellectual property portfolio, and we periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our patents. We recognized our first revenues from the sale of patents during the fourth quarter of fiscal 2007, and continued to recognize patent-related revenues in most of our fiscal quarters through the second quarter of fiscal 2009. Our sales of intellectual property subsequent to the second quarter of fiscal 2009 have been impacted by the downturn in the economy, which has decreased the number of buyers and prices buyers are willing to pay in the intellectual property market.
Our gross margin for the second quarter of fiscal 2010 increased $11.9 million from our gross margin for the second quarter of fiscal 2009, principally reflecting a combination of a 41% increase in revenues between such periods, as well as the effect of asset impairment charges totaling $3.7 million taken in the second quarter of fiscal 2009. Second quarter fiscal 2009 asset impairments consisted of $2.3 million related to the write-down of the carrying value of technology developed by Ample Communications, a $1.1 million write-down of Ample Communications related inventory and an approximate $300,000 write-down of certain manufacturing related fixed assets. Gross margin as a percent of net revenues for the second quarter of fiscal 2009 includes an approximate 13% effect from these asset impairments and explains the majority of the 15% increase in gross margin as a percent of net revenues from the second quarter of fiscal 2009 to the second quarter of fiscal 2010. The remaining 2% increase in our gross margin as a percent of net revenues for the second quarter of fiscal 2010 compared to the same fiscal 2009 period is due primarily to manufacturing efficiencies gained from increased production levels during the quarter partially offset by a drop in revenues associated with the sale or licensing of intellectual property, which have little associated cost.
Our gross margin benefited from the sale of inventories with an original cost of $385,000 in the second quarter of fiscal 2010 and $330,000 in the second quarter of fiscal 2009 that we had written down to a zero cost basis during fiscal 2001. These sales resulted from renewed demand for certain products that was not anticipated at the time of the write-downs. The previously written-down inventories were generally sold at prices which exceeded their original cost. As of April 2, 2010, we continued to hold inventories with an original cost of $2.8 million which were previously written down to zero in 2001. We currently intend to hold these remaining inventories until they become obsolete and will sell these inventories if we continue to experience a renewed demand for these products. While there can be no assurance that we will be able to do so, if we are able to sell a portion of the inventories which are carried at zero cost basis, our gross margin will be favorably affected by an amount equal to the original cost of the zero-cost basis inventory sold. To the extent that we do not experience renewed demand for the remaining inventories, they will be scrapped as they become obsolete.
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Mindspeed Technologies Inc. has a market cap of $295.9 million; its shares were traded at around $9.35 with and P/S ratio of 2.3. MSPD is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
We have significant research, development, engineering and product design capabilities. Our success depends to a substantial degree upon our ability to develop and introduce in a timely fashion new products and enhancements to our existing products that meet changing customer requirements and emerging industry standards. We have made, and plan to make, substantial investments in research and development and to participate in the formulation of industry standards. We spent approximately $24.8 million on research and development in the first six months of fiscal 2010 and $26.4 million in the first six months of fiscal 2009. We seek to maximize our return on our research and development spending by focusing our research and development investment in what we believe are key growth markets, including VoIP and other high-bandwidth multiservice access applications, plus high-performance analog applications, such as optical networking and broadcast-video transmission, and wireless infrastructure solutions for basestation processing and backhaul applications. We have developed and maintain a broad intellectual property portfolio, and we intend to periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our intellectual property. We recognized our first revenues from the sale of patents during the fourth quarter of fiscal 2007, and continued to recognize patent-related revenues in most of our fiscal quarters through the second quarter of fiscal 2009.The 41% increase in our net revenues for the second quarter of fiscal 2010 compared to the comparable fiscal 2009 period mainly reflects higher sales volume in all three of our product families, partially offset by lower revenues from the sale and licensing of intellectual property. Net revenues from our multiservice access DSP products increased $5.4 million, or 50%, mainly reflecting an increase in shipments in our 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. Within multiservice access, we also experienced an increase in shipments in VoIP processors for fiber optic access, particularly to customers in China. Net revenues from our high-performance analog products increased $5.4 million, or 67%, when comparing the second quarter of fiscal 2010 to the second quarter of fiscal 2009, due primarily to an increased demand in crosspoint switches from strength in the telecommunications market in China and an increased demand for our physical media devices, which are used in equipment for fiber-to-the-premise deployments, metropolitan area networks and wide area networks. Net revenues from our WAN communications products increased $3.0 million, or 39%, in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 due primarily to the decrease in demand for our WAN products in the second quarter of fiscal 2009 resulting from weak economic conditions, particularly in the U.S. Demand subsequently increased in the second quarter of fiscal 2010, which resulted in an increase in shipments in our network processor products, our T/E carrier transmission products and our Carrier Ethernet products. Net revenues from intellectual property licensing and sales decreased $2.0 million, or 100%, because we did not recognize any intellectual property sales in the second quarter of fiscal 2010. We have developed and maintain a broad intellectual property portfolio, and we periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our patents. We recognized our first revenues from the sale of patents during the fourth quarter of fiscal 2007, and continued to recognize patent-related revenues in most of our fiscal quarters through the second quarter of fiscal 2009. Our sales of intellectual property subsequent to the second quarter of fiscal 2009 have been negatively impacted by the downturn in the economy, which has decreased the number of buyers and prices buyers are willing to pay in the intellectual property market.
For the first six months of fiscal 2010, the 30% increase in our net revenues compared to the comparable fiscal 2009 period mainly reflects higher sales volume in all three of our product families, partially offset by lower revenues from the sale and licensing of intellectual property. Net revenues from our multiservice access DSP products increased $8.5 million, or 39%, mainly reflecting an increase in shipments in our 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. Within multiservice access, we also experienced an increase in shipments in VoIP processors for fiber optic access, particularly to customers in China. Net revenues from our high-performance analog products increased $6.4 million, or 34%, when comparing the second quarter of fiscal 2010 to the second quarter of fiscal 2009 due primarily to increased demand in crosspoint switches due to strength in the telecommunications market in China and increased demand for our physical media devices, which are used in equipment for fiber-to-the-premise deployments, metropolitan area networks and wide area networks. Net revenues from our WAN communications products increased $8.1 million, or 58%, mainly reflecting the decrease in demand we saw for our WAN products in the first six months of fiscal 2009 due to weak economic conditions, particularly in the U.S. Demand subsequently increased in the first six months of fiscal 2010, which resulted in an increase in shipments mainly in our network processor products and our carrier Ethernet products. Net revenues from intellectual property licensing and sales decreased $5.0 million, or 100%, in the first six months of fiscal 2010 compared to the first six months of fiscal 2009, because we did not recognize any intellectual property sales in the first six months of fiscal 2010. We have developed and maintain a broad intellectual property portfolio, and we periodically enter into strategic arrangements to leverage our portfolio by licensing or selling our patents. We recognized our first revenues from the sale of patents during the fourth quarter of fiscal 2007, and continued to recognize patent-related revenues in most of our fiscal quarters through the second quarter of fiscal 2009. Our sales of intellectual property subsequent to the second quarter of fiscal 2009 have been impacted by the downturn in the economy, which has decreased the number of buyers and prices buyers are willing to pay in the intellectual property market.
Our gross margin for the second quarter of fiscal 2010 increased $11.9 million from our gross margin for the second quarter of fiscal 2009, principally reflecting a combination of a 41% increase in revenues between such periods, as well as the effect of asset impairment charges totaling $3.7 million taken in the second quarter of fiscal 2009. Second quarter fiscal 2009 asset impairments consisted of $2.3 million related to the write-down of the carrying value of technology developed by Ample Communications, a $1.1 million write-down of Ample Communications related inventory and an approximate $300,000 write-down of certain manufacturing related fixed assets. Gross margin as a percent of net revenues for the second quarter of fiscal 2009 includes an approximate 13% effect from these asset impairments and explains the majority of the 15% increase in gross margin as a percent of net revenues from the second quarter of fiscal 2009 to the second quarter of fiscal 2010. The remaining 2% increase in our gross margin as a percent of net revenues for the second quarter of fiscal 2010 compared to the same fiscal 2009 period is due primarily to manufacturing efficiencies gained from increased production levels during the quarter partially offset by a drop in revenues associated with the sale or licensing of intellectual property, which have little associated cost.
Our gross margin benefited from the sale of inventories with an original cost of $385,000 in the second quarter of fiscal 2010 and $330,000 in the second quarter of fiscal 2009 that we had written down to a zero cost basis during fiscal 2001. These sales resulted from renewed demand for certain products that was not anticipated at the time of the write-downs. The previously written-down inventories were generally sold at prices which exceeded their original cost. As of April 2, 2010, we continued to hold inventories with an original cost of $2.8 million which were previously written down to zero in 2001. We currently intend to hold these remaining inventories until they become obsolete and will sell these inventories if we continue to experience a renewed demand for these products. While there can be no assurance that we will be able to do so, if we are able to sell a portion of the inventories which are carried at zero cost basis, our gross margin will be favorably affected by an amount equal to the original cost of the zero-cost basis inventory sold. To the extent that we do not experience renewed demand for the remaining inventories, they will be scrapped as they become obsolete.
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