News

14 August 2009

 

GigOptix grows revenue by 9% as cost cutting yields first non-GAAP profit

For second-quarter 2009, GigOptix Inc of Palo Alto, CA, USA, which designs optical modulators, drivers and transimpedance amplifier (TIA) ICs based on III-V materials, has reported revenue of $4.5m, up 9% on last quarter’s $4.1m and double $2.25m a year ago.

The latter reflects the rollup and consolidation over the last 21 months of the former GigOptix LLC together with Helix Semiconductors AG of Zurich, Switzerland (which makes transimpedance amplifiers, limiting amplifiers, and VCSEL drivers) in January 2008 and Lumera Corp of Bothell, WA (which makes polymer electro-optic modulators) on 9 December 2008 (when GigOptix Inc became a publicly traded company). On a non-GAAP basis, as if Lumera and GigOptix were operating together as of 1 January 2008, revenue rose by $705,000 (19%) year-on-year.

Gross margin has risen from 58% both a year ago and last quarter to 60%. On an adjusted consolidated non-GAAP basis, net income was $25,000, compared to a net loss of $879,000 last quarter and $2.4m a year ago. On the second anniversary of GigOptix LLC’s formation as a restart of iTerra Communications LLC on 1 July 2007, and after eight consecutive quarters of revenue growth, this is the first profitable quarter on a non-GAAP basis for both GigOptix Inc as well as for its predecessors iTerra, GigOptix LLC and Lumera.

This has been achieved by steadily increasing revenue with an expanded, worldwide corporate customer base and enhanced product portfolio, while dramatically reducing costs, which has further improved the firm’s high margins, says chairman & CEO Dr Avi Katz. Although still up from $2.7m a year ago, operating expenses have been cut from $3.8m last quarter to $3.3m. “These cost savings were made without wholesale layoffs of vital employees, as has been seen often in today’s struggling economy, but rather through diligent focus on our essential activities, smart and effective consolidation of all our merged assets, and meaningful contributions from the entire team... at our sites in Bothell, Zurich and Palo Alto,” he adds.

“Though our cash balance at the end of the second quarter ($2.1m) was lower than the previous quarter ($4.6m), it is a reflection of the extended collection of our accounts receivable, which was dictated by some of our major customers and our decision to close our line of credit with Silicon Valley Bank earlier this quarter, which required payment of $500,000 within the second quarter,” says Dawn Casterson, chief accounting officer & acting chief financial officer. “Subsequent to the second quarter, we were able to collect over $2m on these receivables,” she adds. “We remain encouraged by our strong balance sheet, which includes no debt and strong book value.”

In terms of product delivery and development, Q2/2009 saw:

• transition from sampling to production shipments with the GX3440 (a 45Gb/s differential limiting amplifier);

• rejuvenation of the iT product family (RF products for the defense market), with the sampling of two additional new single-bias broadband power amplifiers;

• demonstration of low-power interconnect technology, delivering 8mW/Gb/s for error-free 10Gb/s optical links over 100m of multi-mode fiber (MMF);

• extension of a DARPA research contract for fabricating low-driving-voltage broadband Mach-Zehnder (MZ) modulators using electro-optic (EO) polymer material for operation at very low temperatures in supercomputers;

• acceptance by Airbus Military A400M of a D-Lightsys transceiver containing the HX3401 TIA and HXT3101 VSCEL driver;

• first sales of the LX8400 and LX8900 EO polymer modulators (for 40 and 100Gb/s, respectively) to commercial, defense and academic customers.

“We are very encouraged by the advances that have been made by GigOptix during the second quarter, in terms of product development, products released to the market and the synergistic relationship between the merged entities,” says VP of marketing Julie Tipton. “The release of our LX8900 and LX8400 is the result of the collaborative working methods established with the integration of the teams in Bothell and Palo Alto since the merger of Lumera and GigOptix,” she adds. “The achievement of the HX product line demonstrating such low power consumption levels for a 10G optical link has generated much interest and is due, in part, to the close collaboration between engineers in Zurich and Palo Alto. Similarly, our ability to release a complete family of TIAs to the market was made possible by combining complementary skill sets and developing excellent working relationships after the merger of Helix and GigOptix,” she reckons. “We are now working on numerous customer design-ins with our GX, HX, iT and LX products.”

GigOptix aims to further increase its market share and profitability as it continues to deploy its rollup and consolidation model. “In just two years we have built a company that, as a component supplier to the optical communications industry, is now able to expand into additional markets,” says Tipton.

Already, in third-quarter 2009, GigOptix has released a full range of TIAs under the GX product family (a direct result of the Helix acquisition, as their development was a result of collaboration between Zurich and Palo Alto).

GigOptix also recently signed a memorandum of understanding (MOU) with Pangaea (HK) Ltd, to extend their partnership through the formation of a joint venture company in China. The new organization aims to support customers in the region with the development of low-cost and customized reference designs for GigOptix products.

Also, as part of its intensive cost-reduction effort, GigOptix has embarked on a project to sell a significant portion of its patent portfolio, found to be non-contributory to its major stream of business. The firm says that it will retain and protect the patents and applications identified as most critical for its technology roadmap and platform strategy, but aims to expunge any unnecessary and monetarily distracting patents and applications that it holds.

“As we continue to shape our strategy to conduct business through these tough economic times, we are concentrating on continuous, real-time cash flow management, more so due to the fact that customers have reduced the lead-time of orders to just a few weeks, and stretched out account payable terms, which behoves us to better plan cash management and supply chain management,” says Katz.

See related item:

GigOptix doubles revenue and halves loss year-on-year

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