PLX: Fiscal 3Q12 Financial Results

PLX Technology, Inc. announced third quarter revenues of $26.9 million and a GAAP net loss from continuing operations of $3.3 million, or $0.07 per share (diluted).

Highlights:

• Net Revenues from Continuing Operations Increased 6% to $26.9 million
• Consecutive Record Quarters in PCI Express Revenue
• Gross Margins Improved to 59.8%
• Expanded PCIe Gen3 Portfolio with Three New Products
• Closed Divestiture of Satellite TV and Ethernet Business
• Board Named David K. Raun interim president and CEO

"The team did an excellent job of driving up PCI Express, as well as overall revenues, while increasing margins and building our design win portfolio," said David Raun. "The divesture of the satellite and 10GbE business increased cash by $7.6 million and drove credit line debt down by $3.5 million during the quarter, and will reduce annual operating spending by approximately $20 million."

Product Highlights
PLX announced a new trio of ultra-high lane count PCIe Gen3 switches developed for markets like storage systems, high-end graphics, and communications platforms. The high-performance ExpressLane PCIe Gen3 switches include the PEX8796 (96 lanes, 24 ports), PEX8780 (80 lanes, 20 ports) and PEX8764 (64 lanes, 16 ports), which expand the PLX portfolio to 18 PCIe Gen3 devices. Designers choosing the PEX8796 switch – touting bandwidth of 8Gb/s, per lane, in full duplex mode – are rewarded with throughput of 1.5Tb/s (192GB/s), delivering performance that challenges all other interconnect technologies.

"PLX continues to drive PCI Express Gen3 switch products including the ExpressFabric® solution as an alternative to integrated CPUs as well as other competitive high-speed system connectivity solutions like InfiniBand, SAS, and Ethernet," said Raun. "Our offering of 18 different Gen3 switch devices provides our customers with more options as they select their interconnect solutions."

New PCI Express Markets
By leveraging low-latency PCIe Gen3 performance, new market opportunities are developing to help manage the massive flow of data driven mostly by today’s Internet applications. Designers are creating sophisticated SSD PCIe-based architectures dedicated to storing and retrieving movies, music, photos, and other files.

Individual racks making up the core of data centers now have a new choice when considering fabrics for external box-to-box rack connectivity. By implementing a PCIe-based ExpressFabric, architects can take advantage of native PCIe-based systems to increase performance and lower overall cost and power.

Other markets experiencing growth via PCIe include oil and gas exploration, Wall Street trade routing, test and measurement, communications, and general-purpose computation on graphics processing units used to accelerate a range of applications like embedded systems, mobile appliances, computers, and gaming graphics.

Merger and Acquisition Update
On July 11, 2012, PLX entered into an asset purchase transaction with Entropic Communications, pursuant to which PLX transferred certain specific direct broadcast satellite intellectual property and corresponding technologies to Entropic. The purchased assets relate to the design and development of a digital channel stacking switch (dCSS) semiconductor product for up to $8 million, $3 million of which was received at closing. In addition to the asset purchase, Entropic paid a one-time $4 million licensing fee for intellectual property.

On Sept. 14, 2012, it entered into an asset purchase transaction with Aquantia Corp. pursuant to which PLX agreed to sell the physical layer 10GBase-T integrated circuit family of products and certain assets exclusively related to the products to the purchaser, subject to the satisfaction of certain customary closing conditions. On Sept. 20, 2012, PLX completed the transaction and received the proceeds of $2 million in cash.

The above divestitures resulted in the Satellite TV and Ethernet business, as well as proceeds from the sale, being accounted for as discontinued operations during the quarter and for all comparative periods presented.

On Oct. 3, 2012, Integrated Device Technology, Inc. (IDT) announced that it is extending the expiration date of its exchange offer for all outstanding shares of common stock of PLX, pursuant to the previously announced merger agreement with PLX, dated April 30, 2012, which contemplates the exchange offer for all outstanding shares of PLX common stock, followed by a second step merger. The exchange offer was previously scheduled to expire at the end of the day on Oct. 4, 2012, at 12:00 midnight, New York City time. The exchange offer is being extended as the applicable waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has not yet expired or been terminated. While previous extensions of the expiration date of the exchange offer have been limited to 20 business days pursuant to the terms of the Agreement and Plan of Merger relating to the exchange offer, the parties have agreed to a one-time waiver of this limitation, which permits IDT to extend the offer period for 26 business days until the end of the day on Nov. 9, 2012, at 12:00 midnight. This additional time period will allow the parties to coordinate the timing of any subsequent extensions of the exchange offer with financial reporting requirements of IDT and PLX that the parties anticipate will be applicable to the registration statement relating to the exchange offer on or after Nov. 9, 2012. IDT and PLX both continue to provide information to the Federal Trade Commission in connection with the antitrust review of the transaction. Receipt of antitrust clearance under the HSR Act is a condition to the closing of the merger. PLX recently extended the merger agreement under its terms until January 31, 2013.