Power Integrations (POWI) Q4 2002 earnings summary

Executive summary

• FY02 revenue rose 15% and net income 42% amid a semiconductor downturn; cash and investments increased 42% to $109.4M. Market share gains and product launches expanded the addressable market to $1.6B.

• Growth was supported by new LinkSwitch and DPA-Switch products, cost reductions, and increased manufacturing efficiency; management expected further growth even if end markets remained flat.

Financial highlights

• FY02 net revenue was $108.2M, up 15.0% YoY; product sales were $106.8M and license fees and royalties were $1.3M.

• Gross profit was $47.5M, or 43.9% of revenue, versus $42.8M, or 45.5%, in FY01; operating income rose to $12.0M from $7.9M.

• Net income was $9.6M, up from $6.7M; diluted EPS was $0.32 versus $0.23 in FY01.

• Q4 FY02 revenue was $29.2M, gross margin 47.7%, operating income $4.7M, net income $3.6M, and diluted EPS $0.12.

Outlook and guidance

• FY03 gross margin forecast at 48%–50%, driven mainly by improved manufacturing efficiency; increased customer pricing pressure could lower the result.

• FY03 operating expenses expected to rise in absolute dollars, with higher R&D, sales and marketing, and G&A spending; effective tax rate expected at 30%.

• Management expected continued revenue growth even without end-market growth; cash from operations and existing liquidity were expected to cover working capital and other needs for at least 12 months.