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TranSwitch Reports Q3

SHELTON, Conn. — TranSwitch Corporation (NASDAQ: TXCC), a leading provider of semiconductor solutions for the converging voice, data and video network, today announced financial results for the third quarter ended September 30, 2010.

“Despite the near-term weakness in our telecommunications business, we continue to move forward on our plan to develop new products for introduction in 2011, targeted at high-growth consumer markets”

Net revenues for the third quarter of 2010 were approximately $12.8 million, as compared to net revenues of $14.1 million for the second quarter of 2010 and $15.2 million for the third quarter of 2009. GAAP net loss for the third quarter of 2010 was ($1.8) million, or ($0.08) per basic and diluted common share as compared to a net income of $0.5 million, or $0.02 per basic and diluted common share, during the second quarter of 2010 and a net loss of ($1.5) million, or ($0.08) per basic and diluted common share during the third quarter of 2009. The GAAP gross margin for the third quarter was 56%. This is compared to the Company's GAAP gross margin of 53% for the second quarter of 2010, and 54% for the third quarter of 2009.

Total non-GAAP operating expenses for the third quarter of fiscal 2010 were $6.6 million, as compared to $6.6 million in the second quarter of fiscal 2010 and $8.0 million in the third quarter of 2009. Total GAAP operating expenses for the third quarter of fiscal 2010 were $7.5 million which included expenses of $0.4 million in amortization of purchase price intangibles and $0.5 million in stock-based compensation.

Non-GAAP operating income for the third quarter of fiscal 2010 was $0.6 million, compared to a non-GAAP operating income of $0.9 million for the second quarter of fiscal 2010 and non-GAAP operating income of $0.2 million for the third quarter of 2009. On a GAAP basis, the operating loss for the third quarter of fiscal 2010 was ($0.4) million, compared to an operating loss of ($0.1) million for the second quarter of fiscal 2010 and an operating loss of ($0.6) million for the third quarter of 2009.

Non-GAAP net loss for the third quarter was ($0.8) million, or ($0.04) per share compared with non-GAAP net income of $1.5 million, or $0.07 per share, for the second quarter of 2010 and a non-GAAP net loss of ($0.7) million, or ($0.04) per share, for the third quarter of 2009. The non-GAAP net income for the third quarter of 2010 excluded expenses of $0.4 million in amortization of purchase price intangibles and $0.6 million in stock-based compensation.

Further information about non-GAAP measures and reconciliation to the GAAP results is provided after the financial statements attached to this release.

“We experienced weakness in demand related to our telecommunications products in the third quarter,” said Dr. Ali Khatibzadeh, President and Chief Executive Officer of TranSwitch Corporation. “We believe the broad-based slowdown in the telecommunications equipment market will continue into the fourth quarter.”

“Despite the near-term weakness in our telecommunications business, we continue to move forward on our plan to develop new products for introduction in 2011, targeted at high-growth consumer markets,” continued Dr. Khatibzadeh. “The new products in development leverage our differentiators in high-speed interconnect technology and are expected to create sustainable new growth engines for the company.”

{complink 5835|TranSwitch Corp.}

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