Silicon Laboratories Inc. (Silicon Laboratories) has reported revenues of $415.6 million for the year-end 2008, compared with the revenues of $337.5 million in the previous year-end. It has also reported a net income of $32.9 million, or $0.67 per diluted share, for the year-end 2008, compared with the net income of $204.8 million, or $3.64 per diluted share, in the previous year-end.
The company has reported fourth quarter revenue of $99.3 million, bringing year-end revenue to $415.6 million, a 23% year over year increase. In the fourth quarter, the company delivered solid operating performance and strong gross margins while reducing operating expenses in response to the decline in industry wide demand.
On a GAAP basis, the company reported 2008 gross margins of 61.5%, operating expenses of $212 million and operating income of $43.7 million.
2008 Business Highlights:
Year over year revenue growth was driven by double-digit increases in every major product line, compared to negative industry growth and a challenging demand environment.
The introduction of a record number of products included the addition of new vectors in MCUs, short-range wireless, power, video, consumer audio and mid to low end clocks and oscillators.
The company delivered 24% non-GAAP operating income and 45% growth in non-GAAP earnings per share.
The company reduced SG&A expense as a percent of revenue by more than 300 basis points compared to the prior year.
Strong operating performance produced excellent cash flow, and the company returned $280 million to shareholders in the form of share repurchases.
Fourth Quarter Financial Results:
Fourth quarter revenue of $99.3 million represented a 12.5% sequential decrease. GAAP gross margin was 60.5% of revenue. On a GAAP basis, R&D investment for the period was $27.4 million and SG&A expense was $25.6 million, totaling $53 million in operating expenses. Fourth quarter GAAP operating income was $7.1 million. Other income, principally interest on invested cash, was about $1 million. GAAP diluted earnings per share were $0.14.
The following non-GAAP results exclude the impact of stock compensation expense and $2.6 million in other one-time charges. Non-GAAP gross margin was 61.8%, at the high end of the company’s target range of 60 to 62%. Non-GAAP operating expenses declined from the fourth quarter forecast by more than six% to $41.4 million. Non-GAAP operating income was $20 million or 20.1% of revenue. Non-GAAP diluted earnings per share were $0.37. The reconciling charges are set forth in the financial measures table included below.
During the fourth quarter, both accounts receivables and inventory declined. Inventory decreased by 18% sequentially as the company reacted quickly to changing demand. In the fourth quarter, the company repurchased $38 million or 1.7 million shares and ended the year with cash, cash equivalents and investments balance of $325 million.
The company’s RF business experienced a sequential decline in the fourth quarter. Consumer demand weakness impacted the business, particularly sales into portable navigation devices. However, design activity remained strong, with about 100 new audio design wins during the quarter and significant tier-one design wins in both video and short-range wireless.
The Access business experienced a single-digit sequential decline in the fourth quarter driven by weakness among residential gateway and PON terminal customers. The Broad-based business was also down sequentially, with the MCU products most heavily impacted by the macro economic weakness and declining significantly across most end-market segments.
“Despite the effects of macro economic weakness, we executed well in 2008, increasing share and further diversifying,” said Necip Sayiner, president and chief executive officer of Silicon Laboratories. “While ongoing inventory contraction and a deteriorating demand environment are expected to result in a sequential revenue decline of 20 to 25% for the first quarter, we believe we are building significant market share momentum due to very compelling new products and a strong position at our customers. We intend to contain costs and preserve cash flow while continuing to invest in key programs to build upon these hard-earned market share gains.”