SST: Fiscal 3Q08 Financial Results

SST (Silicon Storage Technology, Inc.)  announced results for the third quarter ended Sept. 30, 2008.

Net revenues for the third quarter were $92.4 million compared with $83.7 million in the second quarter of 2008 and with $107.5 million in the third quarter of 2007. Product revenues for the third quarter of 2008 were $79.8 million, compared with $71.1 million in the second quarter of 2008 and with $97.8 million in the third quarter of 2007. Revenues from technology licensing for the third quarter were $12.6 million, comparable to the second quarter of 2008. Technology licensing revenues in the third quarter of 2007 were $9.7 million.

Net income from operations for the third quarter was $4.1 million compared with a net loss from operations of $5.9 million in the second quarter of 2008 and with net income from operations of $2.4 million in the third quarter of 2007.

Net income for the third quarter of 2008 was $4.9 million, or $0.05 per share, based on approximately 99.7 million diluted shares. By comparison, the company recorded a net loss of $9.6 million, or a loss of $0.09 per share in the second quarter of 2008, based on approximately 101.8 million diluted shares. For the third quarter of 2007, SST reported a net loss of $16.6 million, or a loss of $0.16 per share on approximately 104.2 million diluted shares.

SST finished the third quarter of 2008 with $132.8 million in cash, cash equivalents, short-term investments, and long-term marketable securities, down approximately $16.1 million from $148.9 million at June 30, 2008. During the third quarter, the company made common stock repurchases totaling 2.7 million shares at an aggregate cost of approximately $8.6 million.

Management Qualitative Comments
"Our third quarter revenues were at the high end of our guidance range and our net income was substantially better than our plan due to several favorable, non-recurring adjustments and reduced operating expenses," said Bing Yeh, president and CEO. "However, since September we have seen a significant drop in our new bookings and are acutely aware of a rapidly weakening global economy. Therefore, we are reacting accordingly to reduce our operating expenses with the goal of returning our company to profitability for the benefit of our shareholders, customers and employees. We believe that the depth and breadth of our core business, the investments we have made in new products and technologies, and our strong balance sheet will allow us to weather this economic downturn and will drive growth in revenues and profits for our company in the subsequent recovery."

Fourth Quarter 2008 Outlook
SST expects its fourth quarter revenues to be between $63 million and $69 million. Gross margin is expected to be between 31 and 34 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $28 million and $29 million. Net loss per share is expected to be between $0.07 and $0.12.