The summary of the company’s results are as follows:
The net revenues for the quarter were around $15.0 million, which is in line with prior guidance.
The integration of Centillium was largely completed in the fourth quarter.
The previously announced restructuring was completed in the fourth quarter per plan.
The company improved its balance sheet by repurchasing $15 million in principal amount of its 5.45% convertible notes.
Net revenues for the fourth quarter of 2008 were around $15.0 million, which included around two months of revenue contribution from product lines acquired through the Centillium transaction. The GAAP net loss was ($5.7) million, or ($0.04) per basic and diluted common share. This compares with net revenues of around $10.5 million and a GAAP net loss of ($3.0) million, or ($0.02) per basic and diluted common share during the third quarter of 2008, and net revenues of around $7.2 million and a net loss of ($5.6) million, or ($0.04) per basic and diluted common share, during the fourth quarter of 2007.
During the fourth quarter of 2008, TranSwitch reported a GAAP gross profit of $8.0 million, or a gross margin of 53% on total revenues. The non-GAAP gross profit for the fourth quarter was $8.7 million, or a gross margin of 58%.
Non-GAAP results were a net loss of ($3.7) million, or ($0.03) per share, for the fourth quarter of 2008, compared with a non-GAAP net loss of ($2.6) million, or ($0.02) per share, for the third quarter of 2008 and a non-GAAP net loss of ($4.3) million, or ($0.03) per share, for the fourth quarter of 2007. The non-GAAP results for the fourth quarter 2008 excluded restructuring expenses of $5.2 million, amortization of purchase price intangibles of $0.3 million, stock–based compensation of $0.5 million, the write off of the inventory value write-up due to purchase accounting of $0.7 million and benefits of $4.5 million related to a gain on debt repurchased and $0.2 million due to the reversal of accrued royalties. The non-GAAP results for the third quarter 2008 excluded amortization of purchase price intangibles of $0.1 million and $0.3 million in stock–based compensation. The non-GAAP results for the fourth quarter of 2007 excluded restructuring expenses of $0.8 million, amortization of purchase price intangibles of $0.1 million and $0.5 million in stock–based compensation.
“In the fourth quarter, TranSwitch recorded revenues generally in line with our prior guidance despite the quarter being disrupted by unprecedented worldwide economic turmoil,” stated Santanu Das, president and chief executive officer. “We also completed the acquisition of Centillium Communications in the fourth quarter.”
“Contemporaneously with this acquisition, we announced and completed a company-wide restructuring aimed at having operating expense levels for the combined company at roughly the same operating expense level of TranSwitch on a stand-alone basis prior to the transaction,” continued Dr. Das. “We are happy to report that the restructurings as well as the Centillium integration are now mostly behind us.”
“The Centillium acquisition represents one of the most significant accomplishments in the company’s history as we successfully integrated a company of comparable size, adding a growing revenue stream with practically no incremental operating expense,” stated Das.
“Additionally in the fourth quarter, we strengthened our balance sheet by purchasing $15 million principal amount of our 5.45% Convertible Notes due in 2010 at a considerable discount to par,” added Das.
“Obviously, we are very encouraged by our fourth quarter results. On the other hand, one cannot ignore the magnitude of the economic uncertainty around the world and its potential impact on our business. As a result, we project our first quarter 2009 revenues to be around $14.5 million. At this revenue level, our plan calls for achieving non-GAAP operating profitability. However, we expect to incur a large expense for the fabrication of a new product which had been planned for the fourth quarter of 2008. Including this unplanned expense, we estimate our first quarter 2009 GAAP net loss to be roughly ($0.01) per basic and diluted common share,” concluded Das.
