SMSC Updates Third Quarter Guidance; Anticipates Write-down of Impaired Investments; Expects to Exceed Previous Profit Guidance, Before Investment Write-down.Business Editors HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Dec. 2, 2002 Standard Microsystems Corporation (Nasdaq: SMSC SMSC Short Message Service Center SMSC Standard Microsystems Corporation (New York) SMSC Spiritual Moral Social Cultural (education) SMSC Stephenville Medical and Surgical Clinic ) today announced that it expects revenues for the third quarter of fiscal 2003 to grow by approximately 16% compared to the third quarter of fiscal 2002, excluding a $29.6 million licensing payment received during the third quarter of fiscal 2002, and by approximately 6% sequentially. SMSC also expects that, excluding the impact of the investment write-down described below, net income for the quarter will exceed previous guidance. Due in part to the prolonged economic slump in the technology marketplace, SMSC expects to record non-cash charges in the third quarter of fiscal 2003 for declines in value, considered to be "other than temporary" in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , of its investments in SMC Networks SMC Networks is a company that manufacture network equipment such as network cards, switches, wireless routers, etc. Previously an independent company, it was taken over by the Accton group. External links
The investment in SMC Networks, Inc. is a residual minority interest in a non-public company sold by SMSC in 1997. This investment will be fully written off in the third quarter. Chartered is a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. . The investment in Chartered will be written down to its market value as of November 30, 2002. $3.5 million, or $0.21 per share after taxes, of the Chartered write-down has already been reported as a reduction of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , through Other Comprehensive Income, in prior periods. Following these charges, the remaining $2.9 million value of Chartered stock will represent the only material investment in securities of other companies on SMSC's Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . SMSC's book value as of November 30, 2002 is expected to remain above $12.00 per share. Separately, as previously disclosed in SMSC's 10-Q filing with the Securities and Exchange Commission for the quarter ended August 31, 2002, SMSC notified Intel Corporation (company) Intel Corporation - A US microelectronics manufacturer. They produced the Intel 4004, Intel 8080, Intel 8086, Intel 80186, Intel 80286, Intel 80386, Intel 486 and Pentium microprocessor families as well as many other integrated circuits and personal computer networking (Intel) of a chipset revenue shortfall, as provided for in its September 1999 chipset agreement with Intel. Intel has not made payment to SMSC of that shortfall within the time frame specified in the agreement, and SMSC has given Intel notice of termination of the chipset agreement in accordance with the terms thereof. The parties have commenced discussions regarding their various corporate and intellectual property relationships, including under the chipset agreement; however, there can be no assurance as to the outcome of these discussions. "SMSC has a very strong balance sheet and remains on track from an operational perspective," said Steven J. Bilodeau, Chairman, President and Chief Executive Officer. "Third quarter product revenues are expected to be 16% above last year, and profit is expected to exceed the range of guidance previously provided, excluding the investment write-down. Looking ahead to the fourth quarter of fiscal 2003, we expect another quarter of strong year-over-year revenue growth, approximately 25% - 30%, and income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of about $0.05 per share. SMSC continues to produce positive results, even in the face of challenging market conditions." More detailed guidance for the fourth quarter of fiscal 2003 will be provided when SMSC reports full results for the third quarter on December 17, 2002. ABOUT SMSC: SMSC provides Real World Connectivity(TM) solutions for high-speed communication and computing applications. Leveraging a broad intellectual property portfolio and an extensive history in the design of the world's most preferred Advanced Input/Output products, SMSC delivers integrated hardware and software solutions to manage systems and connect peripherals in today's rapidly evolving computing architectures. SMSC works with industry leading OEMs to combine advanced digital, mixed-signal and analog functionality into Application Specific Standard Products. The Company's Embedded Products connect people, machines and information. SMSC delivers integrated Ethernet and USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. 2.0 solutions, along with a diverse range of other products, for network printers, set-top boxes, home gateway products, car navigation See GPS. systems, cellular base stations, USB peripherals and more. SMSC is based in Hauppauge, New York Hauppauge (pronounced /hɔpɔg/) is a hamlet in the Town of Islip and the Town of Smithtown in Suffolk County, New York, United States. and maintains offices worldwide, including locations in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Asia, Europe and Japan. SMSC operates engineering design centers in Phoenix, AZ, Tucson, AZ, San Jose, CA, Hauppauge, NY and Austin, TX. More information about the Company is available on the World Wide Web at http://www.smsc.com. FORWARD LOOKING STATEMENTS: Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties. These include the timely development and market acceptance of new products; the impact of competitive products and pricing; the effect of changing economic conditions in domestic and international markets; changes in customer order patterns, including loss of key customers, order cancellations or reduced bookings; and excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. and variations in inventory valuation, among others. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and may not reflect the potential impact of any future acquisitions, mergers or divestitures. SMSC competes in the semiconductor industry, which has historically been characterized by intense competition, rapid technological change, cyclical market patterns, price erosion and periods of mismatched supply and demand. In addition, sales of many of the Company's products depend largely on sales of personal computers and peripheral devices, and reductions in the rate of growth of the PC and Embedded markets could adversely affect its operating results. SMSC conducts business outside the United States and is subject to tariff and import regulations and currency fluctuations, which may have an effect on its business. All forward-looking statements speak only as of the date hereof and are based upon the information available to SMSC at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These and other risks and uncertainties, including potential liability resulting from pending or future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , are detailed from time to time in the Company's reports filed with the SEC. Investors are advised to read the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission, particularly those sections entitled "Other Factors That May Affect Future Operating Results" for a more complete discussion of these and other risks and uncertainties. Standard Microsystems and SMSC are registered trademarks, and Real World Connectivity is a trademark, of Standard Microsystems Corporation. Product names and company names are trademarks of their respective holders. |
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