SUNNYVALE, CA -- (MARKET WIRE) -- Oct 23, 2008 -- Leadis Technology, Inc. (NASDAQ: LDIS), an analog and mixed-signal semiconductor developer of color display drivers, LED drivers, power management, audio and touch ICs for mobile consumer electronics devices, today announced results for the third quarter of 2008, ended September 30, 2008. The company also announced anticipated restructuring activities, including the divestiture of its Audio business and other expense reductions.
Q3 2008 Highlights
-- Leadis achieved ten new product design wins in the quarter, including four new display driver designs and six new LED/Power designs. Two of the display driver wins utilize RGBW, and one design win utilizes Leadis' proprietary Epic™ technology for AM-OLED displays. -- Leadis announced sample availability of the LDS535, a 480 channel, one billion color AM-OLED source driver IC, the first of many products the company is developing for the mid-size AM-OLED display market. -- Leadis shipped over 50 Touch evaluation kits, with customer interest extending beyond consumer portable devices into a variety of other markets. The company expects its first Touch design wins in the fourth quarter and revenue in the first quarter of 2009, with promising customer evaluations occurring throughout the world. -- Leadis is currently testing first silicon utilizing its Epic™ technology for AM-OLED displays. -- Leadis shipped engineering samples of its first display driver design utilizing RGBW technology for high resolution amorphous TFT displays.
Third quarter revenue was $4.7 million, below the company's guidance of $5.9 million. Third quarter gross margin was 6%, with 7% gross margin on product sales offset by negative gross margin on NRE activity during the quarter. Under generally accepted accounting principles (GAAP), third quarter net loss was $7.7 million, or $0.26 per basic share, as compared with the $19.5 million, or $0.67 per basic share, net loss reported in the previous quarter and the $8.4 million, or $0.29 per basic share, net loss reported in the third quarter of 2007. The loss in the third quarter of 2008 included a $0.5 million tax benefit for reversal of a tax reserve. The loss in the second quarter of 2008 included a $9.4 million non-cash impairment charge for goodwill and other intangible assets originally recorded in connection with previous business acquisitions.
In addition to reporting GAAP results, the company reports non-GAAP results, which exclude share-based compensation expense per FAS 123(R) and acquisition-related expenses, and goodwill and intangible impairment charges. Non-GAAP net loss for the third quarter of 2008 was $6.9 million, or $0.23 per basic share, as compared to a net loss of $8.2 million, or $0.28 per basic share, in the second quarter of 2008 and a net loss of $5.9 million, or $0.20 per basic share, in the third quarter of 2007. A reconciliation of GAAP measures to non-GAAP measures is included in the financial statements portion of this press release.
The company reported cash, restricted cash and long-term investments of $43 million as of September 30, 2008, which was $11.3 million lower than its balance as of June 30, 2008, due to the third quarter net loss as well as a $1.8 million gross inventory build and $1.2 million increase in receivables.
"Third quarter revenue fell short of our guidance as a result of a decline in one of our key display driver programs," said Mr. Tony Alvarez, President and CEO. "We expect product revenue to improve in the fourth quarter. We managed expenses closely during this difficult quarter, with non-GAAP operating expenses reduced $0.4 million from the previous quarter."
The company continues to focus on achieving design wins across its business areas, as well as expanding its line of analog and mixed-signal products. Design win progress and product introductions for the quarter included:
-- Leadis gained four new display driver design wins, including its third design win utilizing its Epic™ technology designed to dramatically improve AM-OLED manufacturing yields and picture quality. The company won two additional designs utilizing RGBW technology and one AM-OLED design. The company has thirteen display driver design wins through the first three quarters of the year, surpassing its goal of ten to twelve for the full year. -- The company achieved four LED/Power design wins utilizing the LDS8845 and LDS8846, a family of no noise, highly efficient 4-channel white LED drivers. The company added two additional design wins utilizing Power management products. The first utilizes the LDS102, a low voltage reference chip optimized for low noise, and the second utilizes the LDS431L, a 1.24v shunt voltage regulator with greater bandwidth than current industry standard products. -- The company shipped samples of its LDS9505/9504 headphone amplifiers with Gmax™ technology to over 30 customers during the quarter, primarily for evaluation in mobile phone and MP3/PMP applications. -- Leadis signed two additional NRE contracts during the third quarter, and has contracts signed year to date in excess of $2 million. Four additional NRE contracts are committed and currently under negotiation. In aggregate, NRE contracts signed and committed in 2008 are expected to contribute over $4 million upon completion of the related projects.
Q4 2008 Outlook
"We expect revenue to increase by approximately 10% in the fourth quarter of 2008 as compared with the third quarter," said Mr. Alvarez. "Our current display driver programs are expected to show modest growth. We also expect continued traction in our analog businesses. While the analog revenue level remains modest, we now see an increasing number of design opportunities converting to design wins and revenue."
"Based on our current outlook, we must significantly reduce expenses to preserve cash and extend the horizon for our most promising lines of business," continued Mr. Alvarez. "To achieve this, we hired financial advisors during the quarter to assist us in the divestment of our Audio business. We are currently entertaining bids from parties that have expressed interest in this business. Through this divestment and other spending reductions, we are targeting the reduction of our non-GAAP quarterly operating expenses to below $6 million in the first quarter of 2009."
Based on information currently available to the company, expectations for the fourth quarter of 2008 are as follows:
-- Revenue is expected to increase approximately 10% in the fourth quarter of 2008. -- Gross margin on product sales, which varies with product mix, selling price and unit costs, is expected to be approximately flat in the fourth quarter. -- Non-GAAP operating expenses will be reduced as described above, with the goal to be below $6 million in operating expenses in the first quarter of 2009.
Conference Call Today
Leadis will broadcast its conference call today, Thursday, October 23, 2008 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its third quarter 2008 earnings and provide additional guidance.
To listen to the call, dial 1-877-545-1409 approximately ten minutes before the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial 1-888-203-1112. The confirmation code for the replay is 4649358.
A live webcast of the call will be available on the investor relations section of the company's web site, http://ir.leadis.com. An archived webcast of the call will remain available until the company's next earnings call.
About Leadis Technology, Inc.
Leadis Technology, Inc., headquartered in Sunnyvale, California, designs, develops and markets analog and mixed-signal semiconductors that enable and enhance the features and capabilities of portable and consumer electronics devices. Leadis' product offerings include color display drivers, which are critical components of displays used in portable consumer electronic devices; LED drivers, which provide controlled levels of current required to drive light emitting diodes in diverse applications including backlight units; power management ICs including LDOs, LDO controllers, shunt references, thermal switches, current regulators, and battery charger controllers; audio CODEC and FM transmitter ICs, which are integral components in portable media players and their associated aftermarket accessories; and touch controller ICs, which enable highly reliable touch-based input controls and attractive industrial design options for both mobile and non-mobile applications.