28 February 2011

GigOptix reports fifth quarter of double-digit revenue growth

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, has reported record revenue of $26.9m for 2010, up 81.3% on 2009’s $14.8m (which was reduced by a $1.3m government contract billing rate adjustment).

In particular, fourth-quarter revenue was $8.1m, up 158% on $3.1m a year ago and up 12.1% on Q3’s $7.2m (exceeding the expected 7–10%, and the fifth consecutive quarter of double-digit revenue growth).

On a non-GAAP basis, gross margin has risen further, from just 12% a year ago and 55% in Q3 to 56%. This boosted annual gross margin from 51% in 2009 to 55% in 2010.

Non-GAAP net loss for 2010 was just $0.5m, cut from 2009’s $6.8m. In particular, Q4/2010 yielded a profit of $0.6m, compared with $0.3m in Q3 and a net loss of $5.2m a year ago.

The firm also achieved its third consecutive quarter of positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), up from +$0.9m in Q3 to +$1.2m, compared with a loss of –$5.7m a year ago. This took annual adjusted EBITDA to +$1.9m for 2010, compared with a loss of –$6.3m in 2009, driven by both revenue growth and gross margin improvement.

“Over the past year we have consistently increased revenue each quarter, improved gross margin, achieved positive adjusted EBITDA and significantly strengthened our balance sheet to improve our overall financial position,” summarizes chairman & CEO Dr Avi Katz. Cash and investments of $4.5m at the end of Q4 are up on $3.6m a year ago.

“We continued to gain market share, benefitting from the most comprehensive portfolio of electronic devices for fiber-optic high-speed communications available in the market today,” claims Katz.

“We achieved several key product milestones during the year, while we continued to strengthen our leadership position as the industry’s only pure-play semiconductor provider of optical products focused on enabling 40G and 100G networking systems,” claims Katz. “In line with our stated strategy of providing Bundled Solutions to customers to reduce their R&D costs and simplify their supply chain, we became the first company to offer a complete and cohesive solution set for their 40G and 100G DWDM electro-optical requirements consisting of driver, modulator and TIA.”

Also during 2010, GigOptix transferred production of the industry’s first Thin Film Polymer on Silicon (TFPS) optical modulator to contract manufacturing partner Sanmina-SCI in China and delivered the samples to tier-1 customers (in preparation for volume production ramping in 2011). “These modulators address the need by network operators for faster, smaller and lower-power solutions to handle their bandwidth demands,” says Katz. “Moreover, we partnered with Innovative Micro Technology Inc (IMT) as our optical chip fabrication partner to support our future high-volume production requirements,” he adds.

During 2010, GigOptix launched a portfolio of ultra-low-power multi-rate SMART receive optical sub-assemblies (ROSAs) and transmit optical sub-assemblies (TOSAs) targeting short-reach datacom applications, demonstrated at the European Conference and Exhibition on Optical Communications (ECOC 2010) in late September. The firm also achieved full production of 10G, 40G and 100G TIAs, and expanded its 100G DWDM portfolio to include single-channel, dual-channel and quad-channel 8Vpp Mach–Zehnder Modulator (MZM) drivers as well as single- and dual-channel 32Gb/s balanced linear TIAs.

“Having greatly expanded our portfolio throughout 2010, we now offer the broadest portfolio of industry-proven 100G solutions,” Katz claims. “We also have an extensive roadmap for 100G solutions that are currently in development that will enable smaller and lower-power products... We are well positioned in the 40G and 100G markets to drive future revenue growth as we continue to secure new design wins and increase the adoption of our solutions by additional tier-1 customers.”

Strategic mergers and acquisitions have been a key component of GigOptix’s growth plan. “Our recent announcement to merge with Endwave Corp, an acknowledged leader in high-frequency RF solutions and semiconductor products for high-speed wireless mobile backhaul communications, is representative of these key principles,” says Katz. “Both companies share a number of clear and unique synergies including complementary technologies, similar product architectures, as well as common customers and markets that are demanding increasingly more bandwidth,” he adds. “Combining Endwave’s extensive point-to-point microwave radio system knowledge and monolithic microwave IC (MMIC) product portfolio with GigOptix’s portfolio of optical modulators and broadband amplifiers positions us to not only expand these market opportunities, but also enables us to increase our penetration of the existing customer bases and market segments. We will be able to offer solutions to both the high-speed optical and microwave RF front ends,” Katz continues. “With these expanded capabilities, the combined company will be able to leverage Endwave’s manufacturing and GigOptix’s high-speed fiber-optic front-end technology to provide cutting-edge solutions for next-generation 100G and 400G drivers and electro-optic sub-systems.” GigOptix expects the transaction to close in second-quarter 2011.

“Looking forward, we expect to strengthen our portfolio, enabling us to capitalize on more market opportunities as a result of the merger with Endwave,” reckons Katz. “We will maintain focus on our successful strategy of being the leading industry provider of high-speed fiber-optic and mobile wireless communications solutions across all applications, all speeds, and all distances, from short reach to ultra long haul,” he adds.

“We continue to invest our best efforts to be listed on a national securities exchange, and since the announcement of the transaction with Endwave, we have been in close contact with the management of the major exchanges,” discloses Katz. “Our June 2010 conditional approval for NYSE Amex listing expired on 31 December. However, we are actively working on renewal of such position, and we hope to receive it subject to completion of the transaction, so we may be able to commence trading concurrent with the closing of the acquisition, which is expected to occur during the second quarter of 2011.”

For first-quarter 2011, GigOptix expects product revenue to grow sequentially by 5%. “In terms of our government contract revenue, we have been recently notified that a number of government earmarks have been suspended, which is expected to impact approximately $4m of our federal funding as part of the Department of Defense Appropriations Bill that we expected to realize throughout 2011,” notes acting chief financial officer Jeff Parsons. “Therefore, our outlook for revenue from government contracts is difficult to forecast at this time, and we will not be providing guidance on this segment,” he adds. “We continue to aggressively lobby the US Congress to reinstate the earmarks in order to gain continued federal support of our On-Chip Integrated Photonic Polymer Transceiver program.”

See related items:

GigOptix increases Q3/2010 revenue guidance

GigOptix grows 19% sequentially to record revenue of $6.3m for Q2

GigOptix reports record revenue of $5.3m in Q1

GigOptix consolidates debt and cut interest costs

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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