SAN JOSE, Calif. -- Micrel, Incorporated (Nasdaq NM: MCRL), an industry leader in analog, high bandwidth communications and Ethernet IC solutions, today announced financial results for the first quarter ended March 31, 2011.
First quarter revenues of $67.5 million decreased by $8.1 million, or 10.8 percent, from $75.6 million in the fourth quarter of 2010. The larger than expected sequential reduction in revenue was mainly due to lower demand in the communications end markets from a customer manufacturing smartphone and tablet devices. The Company also experienced lower overall demand across multiple end markets due to supply chain disruptions from the crisis in Japan and further inventory reductions by sell-in (POP) channel partners. Compared to the same period last year, first quarter 2011 revenues were higher by $0.3 million.
First quarter 2011 GAAP net income of $9.1 million, or $0.14 per diluted share, compares to fourth quarter 2010 GAAP net income of $13.7 million, or $0.22 per diluted share, and GAAP net income of $9.7 million, or $0.16 per diluted share in the same period in 2010. First quarter 2011 non-GAAP net income of $9.9 million, or $0.16 per diluted share, compares to fourth quarter 2010 non-GAAP net income of $14.5 million, or $0.23 per diluted share, and non-GAAP net income of $10.4 million, or $0.17 per diluted share in the same period in 2010. A reconciliation of the GAAP net income to non-GAAP net income is provided in the financial tables of this press release. Non-GAAP results exclude the impact of stock-based compensation expense and the related tax effects.
Commenting on the first quarter performance, Micrel's President and CEO Ray Zinn said, "In addition to the normal seasonal weakness in demand in the first quarter, we encountered several challenges that resulted in a slower than expected start in 2011. As we announced earlier this month, our top line results were impacted by an unanticipated reduction in sales to a Korean wireless handset and consumer electronic device manufacturer which moderated product deliveries during the quarter to control inventory levels. The Company also experienced a reduction in overall demand towards the end of the quarter related to disruptions in the worldwide electronics supply chain as a result of the earthquake and tsunami in Japan in March."
"Operationally, I continue to be pleased with our execution. Despite the lower revenues, first quarter gross margin of 56.1 percent increased from the previous quarter primarily due to a richer product mix. While we continue to carefully manage operating expenses, our commitment to new product development is paying off as evidenced by the ongoing growth in design wins and new product introductions. As we had anticipated our first quarter book-to-bill ratio was below one, but showed a nice improvement compared to the previous quarter. Importantly, our business continues to generate a significant amount of cash. Cash flow from operating activities was $15.5 million in the quarter, helping our cash, cash equivalents and short term investments balance grow to nearly $122 million, or $1.93 per diluted share. Our strong balance sheet provides Micrel with significant financial flexibility to enhance long-term shareholder value. In addition to maintaining our quarterly cash dividend, during the first quarter we repurchased 433,671 shares of Micrel common stock for a total of $5.8 million."
Mr. Zinn continued, "The crisis in Japan will likely continue to impact the semiconductor industry through the first half of the year. While the Japanese markets represents only about 5 to 7 percent of our overall net sales, the uncertainty associated with the Japan crisis on the supply chain and customer concerns in the current environment make near term forecasting difficult. However, we currently expect sequential top line growth in the second quarter. Our second quarter beginning direct backlog is higher by approximately 8 percent than it was entering the first quarter and overall customer demand through the first three weeks of April is improving. Our design win momentum continues to remain strong and our new products are gaining good acceptance in the marketplace."
Based upon current backlog levels and demand estimates, the Company projects second quarter 2011 revenues will increase by a range of 3 percent to 8 percent on a sequential basis. Gross profit margin is expected to be approximately 56 percent. In addition, the Company estimates that second quarter 2011 GAAP net income will be approximately $0.14 to $0.17 per diluted share.
The Company announced today that Micrel's Board of Directors has authorized a quarterly cash dividend of $0.035 per share of common stock. The payment of this dividend will be made on May 25, 2011, to shareholders of record as of May 11, 2011.