SAN JOSE, Calif.--(BUSINESS WIRE)--July 17, 2003--Cypress
Semiconductor Corporation (NYSE:
CY) today announced that revenue for
the 2003 second quarter was $203.1 million, up 12% from the prior
quarter revenue of $181.0 million and up slightly from the year-ago
second quarter revenue of $202.1 million. Pro forma net income for the
2003 second quarter was $3.4 million, resulting in a pro forma income
per share of $0.03, compared with the prior quarter pro forma loss per
share of $0.10 and the year-ago second quarter pro forma loss per
share of $0.05.
Including amortization of intangibles and other
acquisition-related, restructuring and other special charges and
credits, Cypress posted a GAAP net loss of $12.4 million for the 2003
second quarter, resulting in a loss per share of $0.10, compared with
the prior quarter loss per share of $0.27, and the year-ago second
quarter loss per share of $0.23.
Cypress CEO T.J. Rodgers said, "We're very pleased with our return
to pro forma profitability and positive free cash flow (cash from
operations less capital expenditures) this quarter. The sequential
revenue growth of 12% in the second quarter included incremental sales
from the Micron synchronous (networking) SRAM business we took over.
Bookings and turns were strong all quarter, and we ended the quarter
with book-to-bill greater than 1.0, even with the Micron billing
considered. Backlog grew sequentially as well."
Rodgers continued, "Gross margin for the 2003 second quarter was
approximately 48%, aided by a 3% benefit from the sale of previously
reserved inventory. Operating expenses (Research & Development; Sales,
General and Administrative) as a percentage of sales, improved
approximately four percentage points in the 2003 second quarter, aided
by cost reductions and incremental sales. We ended the quarter with
cash of $600 million, of which approximately $328 million was
earmarked for the redemption of our convertible subordinated notes,
which was completed shortly after the end of the second quarter."
Wide Area Network and Storage Area Network (WAN/SAN)
Revenue from the WAN/SAN segment, which accounted for 32% of
second-quarter revenue, increased 17% from the prior quarter, aided by
the Micron SRAM transaction. The segment posted a gross margin of
approximately 55%. The datacom market continues to suffer from demand
weakness, which we expect to continue through 2003. We anticipate flat
revenue in the third quarter. Segment highlights include:
-- Cypress sampled the industry's first full-function, 72-Mbit
synchronous No Bus Latency(TM) (NoBL(TM)) SRAM, the highest-density
SRAM currently available. Manufactured on Cypress's proprietary
RAM9(TM) 90-nanometer process technology, the CY7C1480 targets
next-generation, high-speed networking applications.
-- Cypress sampled the Ayama(TM) 10000 family of network search
engines (NSEs), optimized for multiprotocol packet classification and
forwarding at 266 million searches per second (MSPS). In Internet
routers, switches, and other network-infrastructure applications, NSEs
accelerate packet processing by offloading search functions from the
application-specific integrated circuit (ASIC) or network processor.
The Ayama 10000 enables network equipment suppliers to quickly deploy
packet processing solutions at 10 gigabits per second (Gbps) and
-- Cypress passed the 1.5 million-unit mark in NSE shipments. This
milestone demonstrates Cypress's leadership in network search
solutions, including TCAM-based NSEs and network coprocessors.
-- Cypress launched its Cynapse(TM) software platform, a unified
application-simulation and development environment for Cypress NSEs.
The software package provides a standard interface for hardware and
software simulations, system performance evaluations, and reference
applications and diagnostics. Software is fast becoming a key
differentiator in the NSE business.
-- Cypress announced that it will use the Intel(R) Control Plane
Platform Development Kit (CP-PDK), a software toolkit based on
standards developed by the Network Processor Forum (NPF) to stimulate
the development of a broad range of applications for NSEs and
coprocessors. Cypress's use of the toolkit will ensure that its NSEs
are compatible with both Intel NPUs and NPF standards.
-- Cypress announced first revenue on its FastEdge(TM) family of
high-performance clock and data drivers. The new devices leverage
Cypress's proprietary silicon germanium (SiGe) technology and advanced
design techniques to achieve jitter performance that is up to 90
percent better than alternative solutions. The FastEdge family
customizes a single base die with metal masks to provide a variety of
clock and data drivers for customers without sacrificing
-- Cypress is ramping production of its field-programmable zero
delay buffer (ZDB). The CY23FP12 device is a high-performance, 200-MHz
clock-distribution solution with a flexible architecture to fit a wide
range of applications. The programmable, single-chip ZDB can replace
multiple, fixed-function clock-distribution devices. It uses Cypress's
proprietary, non-volatile, silicon oxide nitride oxide silicon (SONOS)
Wireless Terminals and Wireless Infrastructure (WIT/WIN)
Revenue from the WIT/WIN segment, which accounted for 29% of
second-quarter revenue, increased 2% from the prior quarter with a
gross margin of approximately 36%. The increase in revenue is
attributable to a slightly higher-density product mix and to the
broadening of our customer base, which we believe resulted in some
market-share gains. We expect WIT/WIN sales to be up in the third
quarter of 2003, aided by seasonal trends. Segment highlights for the
-- Cypress realized first revenue on its 16-Mbit, one-transistor
(1T) pseudo-SRAM (PSRAM) product. The 1.8-V, 70-nanosecond PSRAM
device offers higher density than a conventional SRAM, at a lower
cost. PSRAMs are an integral part of Cypress's portfolio of
MicroPower(TM) SRAMs for cell phones.
-- Cypress sampled a 16-Mbit, second-generation More Battery
Life(TM) (MoBL2(TM)) MicroPower SRAM, manufactured using the company's
proprietary 0.13-micron R8(TM) technology. The CY7C62167/8DV device is
the world's smallest low-power 16-Mbit SRAM, increasing battery life,
talk time, and data storage capabilities in cell phones.
-- Cypress introduced two FailSafe(TM) buffers (CY23FS04 and
CY23FS08) that provide an uninterruptible clock source for
applications such as storage area networking or wireless basestations,
where continuous operation of the system is required to maintain
mission-critical data in the event of a primary reference clock
Computation and Consumer
Revenue from the computation and consumer segment, which accounted
for 35% of second-quarter revenue, was up 18% from the prior quarter
and posted a gross margin of approximately 48%. While PC clock demand
was flat with the prior quarter, as anticipated, the sales of other
consumer-related clocks and USB controllers grew briskly in the
quarter, aided by a continuing increase in the USB adoption rate. We
expect the computation and consumer segment sales to be up in the
third quarter, aided by cyclically stronger demand for consumer
products. Segment highlights include:
-- Cypress sampled its fifth-generation USB 2.0-to-ATA/ATAPI
bridge device, the ISD-300LP, adding to its market-leading USB
portfolio a low-power solution for external mass storage, such as hard
drives, CD-R/Ws (read-write devices), and DVD players. The
best-in-class power efficiency of the ISD-300LP enables enhanced
portability for mass-storage products.
-- Fueled by growing consumer demand for USB 2.0-enabled PCs and
peripherals, Cypress shipped its 250 millionth USB controller during
the quarter, solidifying its overall No. 1 USB market position.
Cypress USB controllers are used in a variety of products from mice,
keyboards, hubs, and mass-storage peripherals, to video and multimedia
players, set-top boxes, and photo printers.
-- Cypress and Envara Inc. announced joint development of a
low-cost, high-performance USB 2.0-to-Wireless LAN (WLAN) solution,
consisting of an external USB 2.0 adapter that enables users to
connect to IEEE802.11g or "multimode" IEEE802.11a/b/g WLANs at the
current top WLAN speed of 54 Mbps. The solution is designed to extend
the benefits of the popular, high-speed USB interface to the growing
number of wireless cafes and "hot spots" that are proliferating in
airports, coffee houses, and other retail establishments, providing
mobile PC users with fast, easy, wireless connectivity.
-- Cypress's WirelessUSB(TM) solution, a revolutionary 2.4-GHz
radio frequency interconnect protocol, received several best-in-class
awards during the quarter. The new technology -- a wireless solution
for mice, keyboards, game controllers and other systems, which offers
an optimal combination of latency, power, bandwidth and price -- was
selected by EDN magazine as the winner of its "Innovation of the Year"
award in the Communications product category. EDN is one of the
industry's most widely read design publications. The WirelessUSB
product family also received the "Electron d'Or 2003" award in the
Network and Telecom Chipset category from Electronique, the leading
French design publication.
-- Cypress and NMB Technologies, the world's No. 1 keyboard
manufacturer, signed an agreement to co-develop WirelessUSB keyboard
and mouse solutions. Also during the quarter, Saitek -- one of the
world's leading manufacturers of video-game peripherals -- selected
Cypress's WirelessUSB solution for its PC and consumer products.
-- Cypress continued to ramp production of a family of clock chips
targeting the digital still camera (DSC) market. Cypress added several
million units per quarter in business with design wins to major
customers, including Sony(R) and Fuji Photo Film, which accounted for
2.2 million units this quarter. The DSC clock business is expected to
grow 30% in the current quarter.
-- Cypress qualified its CY22313 frequency timing generator, which
combines into a single device all the primary timing functions for the
Sony PS2(R) gaming system. Shipments of the new clocking solution are
planned for the current quarter.
Revenue from Cypress subsidiaries, which accounted for 4% of
second-quarter revenue, was up 6% from the prior quarter. The
subsidiaries posted a gross margin of approximately 74%. The excellent
gross margin was offset by the high operating expenses of the new
ventures. As a group, the subsidiaries had a pre-tax loss of $8.0
million in the quarter. We expect revenue contribution from the
subsidiaries to be up at least 15% in the third quarter. Segment