Member Login   |  Site Map
SST > SST Reports Second Quarter 2009 Financial Results

SST Reports Second Quarter 2009 Financial Results

News Release

For More Information Contact:

Leslie Green
Green Communications Consulting, LLC
(650) 312-9060

SUNNYVALE, Calif., July 28, 2009 -- SST (Silicon Storage Technology, Inc.) (NASDAQ: SSTI), a leader in flash memory technology, today announced results for the second quarter, ended June 30, 2009.

Net revenues for the second quarter were $58.1 million compared with $50.1 million in the first quarter of 2009 and with $83.7 million in the second quarter of 2008.  Product revenues for the second quarter of 2009 were $51.8 million, compared with $38.8 million in the first quarter of 2009 and with $71.1 million in the second quarter of 2008. Revenues from technology licensing for the second quarter were $6.3 million, compared with $11.3 million in the first quarter of 2009 and with $12.6 million in the second quarter of 2008.

Loss from operations for the second quarter was $7.5 million compared with a loss from operations of $6.3 million in the first quarter of 2009 and with a loss from operations of $5.9 million in the second quarter of 2008.

SST is in the process of completing an evaluation of a potential impairment charge during the second quarter related to its investment in Grace Semiconductor Manufacturing Corporation, ("GSMC").   SST's preliminary net loss for the second quarter of 2009, before any such potential impairment charge, if any, was $8.2 million, or $0.09 per share, based on approximately 95.8 million diluted shares. If SST is required to further impair its investment in GSMC, its net loss will increase; however, SST cannot at this time estimate the potential range of any such impairment charge, if any.  In the first quarter of 2009, the company recorded a net loss of $9.2 million, or $0.10 per share, based on approximately 95.7 million diluted shares.  For the second quarter of 2008, SST reported net loss of $9.6 million, or $0.09 per share based on approximately 101.8 million diluted shares.

SST finished the second quarter of 2009 with $131.3 million in cash, cash equivalents, short-term investments, and long-term marketable debt securities, up approximately $5.6 million from $125.7 million at March 31, 2009.

Management Qualitative Comments
"After hitting bottom during the month of January, our product shipments rebounded and the momentum continued into the second quarter," said Bing Yeh, chief executive officer.  "The inventory replenishment by our customers, coupled with modest improvement in demand, accounted for our better-than-expected product revenues in the second quarter. Licensing revenue in the second quarter reflected the declines in our licensees' business and is expected to rebound somewhat in the third quarter. Market conditions remain challenging in the memory space as there continues to be uncertainty over the macro-economic environment resulting in poor visibility and continued pricing pressure.  We continue to experience ASP declines, particularly in commodity memory, causing pressure on our gross margins.  Modest growth in revenues is expected with ASP erosion significantly offsetting unit volume increases. Given these difficult conditions, SST continues to place emphasis on cost-control as well as inventory and cash management. Further, we are focusing our resources on areas of our business that will yield the most impact over time, creating additional opportunity without additional R&D expense.  We are taking a fresh look at every aspect of our business and are working hard on our goal of returning our company to profitability."

Third Quarter 2009 Outlook
SST expects its third quarter revenues to be between $61 million and $68 million.  Gross margin is expected to be between 25 and 29 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $22 million and $24 million. Net loss per share is expected to be between $0.07 and $0.03.

Conference Call Dial-in Information
SST will hold a conference call to discuss its financial results today at 1:30 p.m. PT.  Those wishing to participate in the conference call should dial (800) 230-1092, international participants please dial (612) 332-0228, using the password "SST" at approximately 1:20 p.m. PT.  A replay of the call will be available for one week by dialing (800) 475-6701, international participants dial (320) 365-3844, using the access code 107119.  A webcast replay of the conference call will be available until the company's conference call for its third quarter financial results on the company's Web site at http://www.sst.com/about_sst/events.

About Silicon Storage Technology, Inc.
Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of memory and non-memory products for high volume applications in the digital consumer, networking, wireless communications and Internet computing markets.  Leveraging its proprietary, patented SuperFlash technology, SST is a leading provider of nonvolatile memory solutions with product families that include various densities of high functionality flash memory components and flash mass storage products.  The company also offers its SuperFlash technology for embedded applications through its broad network of world-class manufacturing partners and technology licensees, including TSMC, which offers it under its trademark Emb-FLASH.  SST's non-memory products include NAND controller-based products, smart card ICs and modules, flash microcontrollers and radio frequency ICs and modules.  Further information on SST can be found on the company's Web site at http://www.sst.com.

Forward-Looking Statements
Except for the historical information contained herein, this news release contains forward-looking statements regarding memory and non-memory market conditions, SST's future financial performance, including a potential impairment charge related to SST's investment in GSMC, the ability to control expenses, manage inventory and generate cash, the launch, design cycle and performance of new products, SST's licensing business, SST's ability to diversify its business, the transition of SST's products to smaller geometrics, and SST's ability to bring new products to market, all of which involve risks and uncertainties.  These risks may include timely development, acceptance and pricing of new products, the terms, conditions and revenue recognition issues associated with licensees' royalty payments, the impact of competitive products and pricing, and general economic conditions as they affect SST's customers, as well as other risks detailed from time to time in the company's periodic reports, including the Annual Report on Form 10-K for the year ended December 31, 2008, Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and other reports filed from time to time with the Securities and Exchange Commission.  These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, SST disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

For more information about SST and the company's comprehensive list of product offerings, please call 1-888/SST-CHIP.  Information can also be requested via email to literature@sst.com or through SST's Web site at http://www.sst.com.  SST's head office is located at 1171 Sonora Court, Sunnyvale, Calif.; telephone: 408/735-9110; fax: 408/735-9036.

The SST logo and SuperFlash are registered trademarks of Silicon Storage Technology, Inc. All other trademarks or registered trademarks are the property of their respective holders.

###

-- FINANCIAL TABLES TO FOLLOW --

			                Silicon Storage Technology, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (unaudited)
                       (in thousands, except per share data)


                                Three Months              Six Months
                               Ended June 30,           Ended June 30,
                              ---------------        --------------------
                                2008     2009          2008          2009
                                ----     ----          ----          ----

    Net revenues:
      Product revenues       $71,073  $51,766      $140,771       $90,553
      Technology
       licensing              12,627    6,317        24,014        17,659
                              ------    -----        ------        ------
        Total net
         revenues             83,700   58,083       164,785       108,212
    Cost of revenues          59,751   44,574       115,127        79,109
                              ------   ------       -------        ------
    Gross profit              23,949   13,509        49,658        29,103
                              ------   ------        ------        ------
    Operating expenses:
      Research and
       development            15,223   11,250        30,835        22,664
      Sales and
       marketing               6,918    5,166        14,401        10,126
      General and
       administrative          7,721    4,636        14,904         9,796
      Other                        -        -             -           329
                              ------   ------        ------        ------
        Total operating
         expenses             29,862   21,052        60,140        42,915
                              ------   ------        ------        ------
    Loss from operations      (5,913)  (7,543)      (10,482)      (13,812)
    Other income, net            976      688         1,850         1,185
                                 ---      ---         -----         -----
    Loss before provision for
     (benefit from) income
     taxes and pro rata share
     of loss from equity
     investments              (4,937)  (6,855)       (8,632)      (12,627)
    Provision for (benefit
     from) income taxes        2,390    1,048        (4,660)        3,922
                               -----    -----        ------         -----
    Loss before pro rata share
     of loss from equity
     investments              (7,327)  (7,903)       (3,972)      (16,549)
    Pro rata share of loss
     From equity investments   2,241      254         4,137           849
                               -----      ---         -----           ---
    Net loss                 $(9,568) $(8,157)      $(8,109)     $(17,398)
                             =======  =======       =======      ========

    Net loss per share -
     basic and diluted        $(0.09)  $(0.09)       $(0.08)       $(0.18)
                              ======   ======        ======        ======
    Shares used in per
     share calculation -
     basic and diluted       101,793   95,747       102,698        95,726
                             =======   ======       =======        ======


    SST is in the process of completing an evaluation of a potential
    impairment of its investment in GSMC.  SST is unable to estimate the
    potential range of any such charge, if any, at this time.  If SST is
    required to incur such a charge, SST will reflect the charge in its
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 to be
    filed with the Securities and Exchange Commission. Any such charge will
    increase SST's net loss and net loss per share.



                 Silicon Storage Technology, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                    (unaudited)
                                  (in thousands)


                                                  December 31,  June 30,
                                                       2008      2009
                                                       ----      ----

                         ASSETS
    Current assets:
      Cash and cash equivalents                       $50,880   $51,206
      Short-term investments                           48,997    49,664
      Trade accounts receivable, net                   20,117    31,421
      Inventories                                      54,159    33,323
      Other current assets                              4,153     3,972
                                                        -----     -----
        Total current assets                          178,306   169,586

    Property and equipment, net                        18,913    15,243
    Long-term marketable equity investments            18,196    26,846
    Long-term marketable debt securities               31,848    30,467
    Goodwill and intangible assets, net                14,794    13,407
    Other assets                                       26,426    26,037
                                                       ------    ------
        Total assets                                 $288,483  $281,586
                                                     ========  ========

                       LIABILITIES
    Current liabilities:
      Trade accounts payable                          $19,146   $21,660
      Accrued expenses and other liabilities           14,200    11,493
      Deferred revenue                                  3,841     2,304
                                                        -----     -----
        Total current liabilities                      37,187    35,457

    Other liabilities                                   8,082    10,052
                                                        -----    ------
        Total liabilities                              45,269    45,509
                                                       ------    ------

                  SHAREHOLDERS' EQUITY
    Common stock                                      412,312   414,256
    Accumulated other comprehensive income             14,308    22,625
    Accumulated deficit                              (183,406) (200,804)
                                                     --------  --------
      Total shareholders' equity                      243,214   236,077
                                                      -------   -------
        Total liabilities and shareholders'
         equity                                      $288,483  $281,586
                                                     ========  ========


    SST is in the process of completing an evaluation of a potential
    impairment of its investment in GSMC.  SST is unable to estimate the
    potential range of any such charge, if any, at this time.  If SST is
    required to incur such a charge, SST will reflect the charge in its
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 to be
    filed with the Securities and Exchange Commission.  Any such charge will
    decrease the carrying value of SST's investment in GSMC and will be
    reflected in other assets.



              Silicon Storage Technology, Inc. and Subsidiaries
                                Supplemental Data


                               Percentage of       Change in
                               Gross Product
                                  Revenue           Revenue
                               -------------        -------
                                               2Q08 to   1Q09 to
                             2Q08  1Q09  2Q09    2Q09      2Q09
                             ----  ----  ----    ----      ----

    Product Revenue By
     Ship-To Location
      North America             5%    6%    4%     (48%)     (14%)
      Total International      95%   94%   96%     (27%)      38%
        Europe                  7%    7%    4%     (64%)     (29%)
        Japan                   9%    7%   11%       0%      109%
        Korea                   4%    3%    7%      23%      214%
        China and Taiwan       70%   68%   66%     (30%)       3%
        Other Far East          5%    9%    8%       6%       19%

    Product Revenue by
     Application
      Digital Consumer         32%   29%   23%     (50%)      11%
      Internet Computing       21%   22%   21%     (29%)      27%
      Networking               12%   17%   15%     (12%)      12%
      Wireless
       Communications          35%   32%   41%     (16%)      85%
      Total                   100%  100%  100%     (28%)      35%

    Licensing Revenue as a
     % of Total Revenue        15%   23%   11%     (50%)     (44%)

			

 
This site, text and images are copyright © 2009 Silicon Storage Technology, Inc. All rights reserved. The SST logo, SuperFlash and FlashFlex are registered trademarks of Silicon Storage Technology, Inc. NANDrive, MTP, MPF, SSF, CSF, SQI, Serial Quad I/O, Concurrent SuperFlash, ComboMemory, and Z-Scale are trademarks of Silicon Storage Technology, Inc. All other trademarks are recognized as being held by their respective owners.
If you have any questions or problems with this website please contact the webmaster.