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Parthus edges toward profitability
Wednesday, April 17 2002
by Matthew Clark
Parthus Technologies, which is in the middle of a merger with Ceva Inc., says it
expects to return to profitability in the second half of 2002.
For the first three months of 2002, total revenue at Parthus came to USD10.7
million, a nine percent year-on-year increase, and up by two percent on fourth
quarter 2001 revenue.
The business' return to profitability appears to be on track and Parthus said it
experienced a seven percent decrease in operating expenses, a six percent
decrease on R&D costs and a 16 percent fall in sales and marketing costs as well
as a nine percent fall in administrative costs.
And the payoff for these reduced costs was a big 26 percent fall in pro forma
loss. The Irish semiconductor design company said its pro forma loss in Q1 2002
was USD3.2 million, compared to USD4.3 million at the same time a year earlier.
These losses equated to USD0.042 per American depository share in Q1 2002,
compared to losses of USD0.045 and USD0.052 last year and in the previous quarter
respectively.
Licensing and royalty revenue, a figure watched closely by analysts, grew to
USD8.9 million, up 53 percent from USD5.9 million in the first quarter of 2001
and up two percent from USD8.7 million in the fourth quarter of 2001. In fact
licensing and royalty revenue now accounts for 84 percent of Parthus' total
revenue, up from 60 percent a year ago and from 83 percent of total revenue in
the fourth quarter.
In the quarter the company won six new licensing agreements and four new
customers.
Looking ahead, the Irish firm admitted that semiconductor industry visibility
remains poor and overall the industry is not set to recover significantly until
the end of this year. Nevertheless Parthus says it expects to see continued
licensing and royalty growth over the year as well as declining operating
expenses. "We believe these metrics are strong indicators of our continued
progress towards planned return to profitability in 2002," claimed Elaine
Coughlan, chief financial officer of Parthus.
Neil Clifford, technology analyst with Goodbody Stockbrokers in Dublin, said that
the figures looked good and that he expected the firm to meet its profitability
targets in the second half the year.
"Revenue was in line with our expectations and EPS came in slightly ahead of
what we forecast, but the real positive news is in its licensing and royalty
figures. Parthus showed very strong growth there which is an encouraging trend,"
Clifford told ElectricNews.Net
And despite the strong figures, industry watchers and Parthus' customers are
still trying to breakdown what the impact of the company's planned merger with
Ceva will have on the business. The merger with Ceva, which is the IP licensing
subsidiary of DSP Group, has so far been praised by analysts and is set to close
in the third quarter of this year.
Discussing the merger, and reiterating comments that have been made over the past
two weeks, Brian Long, chief executive officer of Parthus said that ParthusCeva
will emerge from the deal well positioned to take on new trends in the industry.
These trends, according to Long, include the movement toward open-standard RISC
(reduced instruction set computer) and DSP (digital signal processors)
architectures and away from traditional proprietary solutions.
Long also said increased product complexity and shrinking market-windows have led
to growth in the licensing of complete platform level-IP solutions, and after the
merger Parthus will be able to provide these complete products.
In layman's terms, after the merger is completed, ParthusCeva will be able to
sell DSP core designs, a major component in the construction of mobile phones,
which have custom-made "system-on-chip" features and functions, the field in
which Parthus is a pioneer.
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