Gennum Reports 2011 First Quarter Results

BURLINGTON, ON, April 6 /CNW/ - Gennum Corporation (TSX: GND) today reported unaudited financial results for the first quarter of fiscal 2011. First quarter revenue of $31.5 million increased 7% over the first quarter of 2010 and diluted earnings per share was $0.13 compared to $0.12 in 2010.

First Quarter

(in millions of U.S. dollars except per share amounts)
February 28, 2011 February 28, 2010
Revenue 31.5 29.5
Gross margin 22.8 21.5
Gross margin as a percentage of revenue 72.5 72.9
Operating income 6.5 6.1
Adjusted EBITDA1 9.3 8.9
Net earnings 4.6 4.0
Net earnings per share (basic and diluted) 0.13 0.12

"We achieved solid first quarter results. Gennum introduced several new, industry-first products for our core markets as well as launched our new transceiver ICs for Thunderbolt cables that address the demand for high speed consumer connectivity. Beyond this, we announced the acquisition of Nanotech Semiconductor which significantly expands our optical transceiver IC portfolio," said Dr. Franz Fink, President and CEO, Gennum. "Looking ahead, our second quarter order book at this time is similar to first quarter order levels. We have been working very closely with our customers and distribution partners to assess the full impact of the recent events in Japan. While we have limited long-term visibility at this point, there is potential for a near-term impact to our business. We remain focused on executing our strategy and I am confident Gennum is well positioned for continued market success."

Gennum recorded revenue of $31.5 million in the first quarter of 2011, a 7% increase over the same period in 2010 as all three product portfolios exceeded the comparable period in the prior year. Gross margins as a percentage of sales remain strong at 72.5% in the quarter.

Operating income in the quarter was $6.5 million compared to $6.1 million in the first quarter of 2010. The increase was driven mainly by higher revenue at similar gross margins, partially offset by higher operating expenses, primarily research and development. Net income in the first quarter of 2011 was $4.6 million or $0.13 per share compared to $4.0 million or $0.12 per share in the first quarter of 2010.

Adjusted EBITDA1 in the quarter was $9.3 million, compared to $8.9 million in the first quarter of 2010.

Outlook

Looking ahead, our current order book for the second quarter is similar to the order book at the same time in the first quarter of 2011. We are working closely with our customers, employees and partners in Japan to ensure they have the support needed to begin the rebuilding process. At this point, we have limited visibility on the long-term impact to our business and we are taking a cautious stance over the next few quarters. As such, we might experience some near-term impact to our business as customers bring production back online over the coming months.

Despite these uncertainties, we continue to execute against our business strategy and invest to strengthen our core market position and expand our capability to address the emerging high-speed consumer connectivity market. Our new product traction constitutes 34% of revenue in the first quarter and we are encouraged by continued design-in activities.

New Product Introductions

Gennum introduced its new 25Gb/s clock and data recovery (CDR) integrated circuits designed to support the implementation of 100Gb/s Ethernet optical transceivers. The GN2425 and GN2426 are designed to handle 25Gb/s data streams within next-generation 100Gb/s pluggable fiber-optic modules, line cards and direct-attach copper cables.

Gennum also launched the industry's first in-connector transceiver chip for Thunderbolt™ active copper cables. Gennum's new GN2033 is the world's first signal conditioner chip enabling the transmission of data and display across a copper cable at cutting edge speeds.

Finally, Gennum announced the addition of three new, next-generation 3Gb/s adaptive cable equalizers (EQs) to its innovative portfolio of broadcast solutions. The next-generation adaptive cable EQs provide cable reach to 200 meters, best in class density and simplify connector options.

The Company will be demonstrating its next generation products at the National Association of Broadcasters (NAB) show in Las Vegas April 11-14, 2011.

Dividend

Gennum's Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on May 4, 2011 to shareholders of record on April 20, 2011.

Our interim financial statements for the first quarter of 2011 and related management's discussion and analysis have been filed and may be viewed on our website www.gennum.com and on SEDAR www.sedar.com.

Download the complete financial results (PDF)
http://www.gennum.com/extranet/file/q1fy11-financials.pdf

Gennum will hold a conference call to discuss 2011 first quarter results on Thursday, April 7, 2011 at 8:00 am (ET). To access the call, participants should dial 1-877-974-0446. The conference call will also be webcast live at www.gennum.com or www.newswire.ca and subsequently archived on the Gennum site. A rebroadcast of the call will be available until May 7, 2011. To access the rebroadcast, dial 1-877-289-8525 and enter the passcode 4425365#. Download a slide presentation to accompany the discussion http://www.gennum.com/q1fy11-downloads.

About Gennum Corporation
Gennum Corporation (TSX: GND) designs innovative semiconductor solutions and intellectual property (IP) cores for the world's most advanced consumer connectivity, enterprise, video broadcast and data communications products. Leveraging the company's proven optical, analog and mixed-signal products and IP, Gennum enables multimedia and data communications products to send and receive information without compromising the signal integrity. Recognized as an award winner for advances in high definition (HD) broadcasting, Gennum is headquartered in Burlington, Canada, and has global design, research and development and sales offices in Canada, Mexico, Japan, Germany, United States, Taiwan, India and the United Kingdom. www.gennum.com

Caution Regarding Forward-Looking statements

This document contains statements which constitute forward-looking statements. These forward-looking statements are not descriptive of historical matters and may refer to management's expectations or plans. These statements include but are not limited to statements concerning: Gennum's business objectives and plans including Gennum's corporate strategy and strategic priorities; Gennum's future financial performance and prospects including revenues, gross margins and earnings, and ability to achieve operating earnings, cash flow and other business model targets; future trends in the semiconductor products and intellectual property licensing industries and, in particular, market trends for analog and mixed-signal products, optical products and intellectual property products and licensing; Gennum's expectations for sales and licensing of its products in these markets including anticipated costs and fees, sales, product prices, size, duration, growth or decline of market opportunities and competitive and pricing pressures in these markets; Gennum's product roadmap and the speed at which Gennum is able to introduce new products; the adoption of new standards in the markets in which Gennum competes and the ability of Gennum to anticipate these changes and successfully address new opportunities; sales and capital spending plans and estimates, shipment levels and operating expenses; exchange rate fluctuations in, and the relative values of, the Canadian dollar, the U.S. dollar and the Japanese yen; Gennum's ability to finance its growth plans and make necessary investments; and litigation in which Gennum is involved.

Inherent in forward-looking statements are risks and uncertainties beyond Gennum's ability to predict or control including, but not limited to, risks associated with: competitive and pricing pressures in the increasingly competitive environment in which Gennum operates; changes in the mix of products sold which, due to associated margins, can impact Gennum's financial results; economic cycles in the semiconductor industry including downturns which can result from adverse general economic conditions; the effects of the recent earthquake and tsunami in Japan and the resultant impact upon Gennum's sales in Japan, which comprise approximately 30% of Gennum's revenues; our ability to anticipate needs for future products and successfully execute our product roadmap, including the possibility of the emergence of disruptive technologies which negatively impact our positioning in the marketplace; the risk that unforeseen factors may arise that result in us not being able to achieve our operating income, cash flow and other business model targets; possible impairments of assets which could be required in the future; fluctuations in foreign exchange rates and their potential adverse impact upon our financial results; our reliance on external foundries and suppliers and the potential adverse effects of disruptions in any of these arrangements; the successful integration of acquisitions; our ability to attract and retain key personnel necessary for our business; our ability to successfully protect our intellectual property rights; and the initiation and outcome of legal proceedings.  Readers should also refer to the sections entitled "Risks and Uncertainties" in our 2010 management's discussion and analysis and "Risk Factors" in our most recent annual information form, each as filed on SEDAR at www.sedar.com.

Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document.  Such statements are based on a number of assumptions which may prove to be incorrect including, but not limited to, the following assumptions: there is no material deterioration in the business and economic conditions in the marketplace for Gennum's products; the effects of the recent earthquake and tsunami in Japan will not have a material adverse impact upon Gennum's revenues; Gennum's expectations regarding market trends for analog and mixed-signal products, optical products and intellectual property products and licensing are not materially incorrect; Gennum is able to execute its product roadmap without delays or disruptions having a material impact on Gennum; Gennum's expectations relating to the needs and direction of the marketplace for its products are within reasonable bounds of accuracy and Gennum is able to introduce products and capitalize on new opportunities generally as expected; Gennum's expectations relating to its future operating expenses, as well as the capital required to conduct its business in the future, are not materially incorrect; significant impairments of assets will not arise; material disruptions in the manufacture and supply of products and services to Gennum by foundries and suppliers will not materialize; Gennum's expectations relating to competitive pressures, including pricing pressures, as well as Gennum's expectations relating to the mix of products to be sold by it, are not materially incorrect; significant fluctuations in foreign exchange rates which materially adversely affect Gennum's financial results do not arise; customer demand for Gennum's products remains generally as anticipated; Gennum is able to successfully integrate acquisitions; and Gennum is able to continue to retain and attract technical and other key employees.

Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause Gennum's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Consequently, readers should not place any undue reliance on these forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. We disclaim any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.


1 "Adjusted EBITDA" is a non-GAAP financial measure that does not have any standardized meaning under GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. A definition of this term, a description of why we believe it is a useful measure, and a quantitative reconciliation to the most directly comparable measure calculated in accordance with GAAP is set forth under the heading "Non-GAAP Reporting - EBITDA" in our management's discussion and analysis as filed on SEDAR at www.sedar.com.

SOURCE Gennum Corporation

For further information:

Gennum Media Contact   
Robin Vaitonis     
Tel: 480-381-6302    
E-mail: robin.vaitonis@gennum.com  


Gennum Investor Relations Contact 
Gregory Miller
Senior Vice-President, Finance & Administration and
Chief Financial Officer
Gennum Corporation
Tel:  905-632-2999 ext. 3060
E-mail: greg.miller@gennum.com

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