12 May 2010


GigOptix reports record revenue of $5.3m in Q1

For first-quarter 2010, GigOptix Inc of Palo Alto, CA, USA, which designs modulator and laser drivers and transimpedance amplifier (TIA) ICs based on III-V materials as well as polymer electro-optic modulators for fiber-optic communications systems, has reported record revenue of $5.3m. This is at the high end of guidance and up 29% on $4.1m a year ago and 71% on $3.1m last quarter.

With revenue from government contracts dropping from $1.6m a year ago (39% of total revenue) to just $0.1m (3% of revenue), growth is driven by product revenue of $5.2m (97% of revenue), up 38% on last quarter’s $3.7m and 107% on $2.5m a year ago (61% of revenue). “Our government revenues were abated while we resolved our billing issue with the government, which I’m pleased to report is resolved and programs will hopefully be back on track in the second quarter,” says chairman & CEO Dr Avi Katz.

The record revenue is a result of efforts to strategically acquire valuable assets within the optical communications industry over the past several years (highlighting growth from the CX product line, acquired with analog and mixed-signal custom ASIC supplier ChipX Inc of Santa Clara, CA last November) and to surround the firm with an experienced management team, according to chief financial officer Ron Shelton.

“We saw increased demand across all our high-speed optical market products including drivers, amplifiers, thin-film polymer on silicon (TFPS) modulators, and analog mixed-signal ASICs,” notes Katz. “As our current product portfolio gains traction in the industry, we continue to focus on breakthroughs with our technology pipeline,” adds Katz. “The first major event was through our alliance with Sanmina-SCI to manufacture our proprietary TFPS modulators.”

During the quarter, GigOptix moved its 40 and 100Gbps TFPS modulators to production and entered into a manufacturing partnership with electronics manufacturing services (EMS) firm Sanmina-SCI Corp of San Jose, CA, USA to produce its high-bandwidth modulators designed for 40 and 100Gbps long-haul optical transponders.

“We recently moved to mass production and shipping of our 40Gbps receiver amplifier ICs to tier 1 telecom OEMs, started shipping volumes of our high-performance 100G DP-QPSK drivers [the industry’s first monolithic solution for the next-generation 100G DP-QPSK DWDM market] to a tier 1 telecom OEM, as well as sampling our 40Gbps and 100Gbps MZ-DPSK TFPS modulator to a number of tier 1 customers,” says Katz. “All three products offer meaningful advantages over current technology in the marketplace and we have positioned ourselves as an emerging leader in the 40Gbps and 100Gbps area,” he adds.

Although up from 38% last quarter, non-GAAP gross margin of 52% is down from 60% a year ago. This is due mainly to a drop in higher-margin government billings, and lower margins associated with a ChipX product line, which is being phased out by working with customers to replace the product line with newly designed products. However, GigOptix says that, as it continues to integrate operations, focus on cost-reduction initiatives and increase sales of newer, higher-margin products, gross margin should trend above 50% during 2010.

“We have also successfully managed our expenses following our acquisition of ChipX,” says Katz. Total operating expenses have been cut from $7m last quarter to $4.6m. R&D expense was $2.1m, up from $1.5m a year ago (due mainly to increased spending as a result of the ChipX acquisition as well as certain costs being classified as R&D resulting from almost no government billings) but down from $2.3m last quarter. Selling, general and administrative (SG&A) expense has been cut from $3.7m last quarter to $2.1m, due to a $1.2m drop in acquisition-related expenses, a reduction in professional fees (including legal, accounting and auditing services), as well as consolidation of corporate SG&A functions after the ChipX acquisition.

On a non-GAAP basis (excluding the impact of restructuring expenses and other non-cash items) operating loss has been cut from $7.1m last quarter to $0.9m. Though up from $0.9m a year ago, net loss has been cut from $2.8m last quarter to $1.1m.

Nevertheless, during a quarter that involved the acquisition of ChipX, cash and cash equivalents fell from $3.6m to $1.7m. “We have restructured and consolidated our outstanding debt into a new credit facility with Silicon Valley Bank (SVB). This new facility offers better borrowing terms and more flexibility as we continue to grow the company,” says Katz.

“We have also strengthened our teams in finance, marketing, operations and sales with talent to support our continuous growth,” he adds. During the quarter, GigOptix promoted Julie Tipton to senior VP of operations from VP of marketing and Padraig O’Mathuna to VP of marketing from director of product marketing, and hired Jay De La Barre as VP of global optical sales, Brian Groft as director of sales Americas, Dan Takise as director of sales Far East, and Jeff Parsons as director of finance & corporate controller.

“GigOptix is launching revolutionary technology into the market at a rapid pace,” says Katz. “Three years after inception we continue to demonstrate our ability to monetize the value of our organic and acquired portfolio of intellectual property by increasing customer acceptance,” he adds. “As market conditions continue to improve, we believe that we will see continued demand for our innovative product base and technology pipeline in all areas of telecom, datacom and consumer electronics,” Katz continues.

During the quarter, GigOptix announced the availability for sampling of its:

  • GX3101 universal limiting TIA, which is designed for fiber-optic communication systems such as wireless base-station backhaul, Fiber Channel, Ethernet and SONET transceivers operating at 1-14Gbps over distances of 10m to 80km (designed to simplify logistics by enabling one solution support for a variety of optical reaches, speeds and standards); and
  • GX3122 dual-channel linear TIA for use in next-generation 40Gbps DWDM coherent optical receivers (designed to have the required large dynamic range and handle the high AC and DC currents with a consistently low THD).

GigOptix also announced the production release of:

  • Flip-chip versions of all members of the low-power HX4 family of parallel 4x10G and 12x10G PMDs for 40 and 100Gbps Ethernet and 120G Infiniband Active Optical Cables (AOC); and
  • GX3440, a 45Gbps differential limiting amplifier for use in 40Gbps DPSK and DQPSK telecom receivers and instrumentation applications (developed in cooperation with a major telecom customer).

“We continue to see strong sales and customer activity, and expect that revenues will continue to grow sequentially through the rest of the year,” comments Shelton.

See related items:

GigOptix grows 54% in 2009 to $14.8m, but margins hit by ChipX acquisition

GigOptix gives update and outlook for 2010

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