Integrated Silicon Solution In (NASDAQ:ISSI)

2013 First Quarter Conference Call Notes:

The March quarter benefited from increased revenue from our products sold into the IMM and communications markets as industry conditions are starting to show signs of improvement in those markets.

We're seeing rising shipment volumes and increasing design activity for several of our new products that we expect to support revenue growth in the coming quarters, including synchronous SRAM, DDR2 and DDR3, and RLDRAM among others.

Lastly, we reported a $2.1 million gain from the sale of a portion of our Nanya shares acquired through our previously announced equity investment
and technology agreement.

With the recent strong performance of Nanya stock, this strategic relationship is becoming a very profitable investment for ISSI.

Looking at our revenue in more detail, despite seasonal softness, the March quarter was down only 1.8% from December quarter and up 20% year over year.

SRAM and DRAM revenue increased to $66.1 million up 1% sequentially and 10% over the prior year as we continue to gain volume and expand our addressable markets.

NOR flash revenue was $7.2 million, and the analog revenue was $1.7 million, both within our expected range.

Turning to our end markets, let me start by saying that, generally speaking, the global macroeconomic environment is showing signs of stability,
and we begin to see pockets of improvement in certain markets and regions during the quarter.

We believe these improvements plus our increased market share and broader product portfolio have positioned ISSI well to capture new growth
opportunity.

On July 27, 2010 ISSI reported fiscal 2010 third quarter results:

• Revenue in the third fiscal quarter ended June 30, 2010 was a record $71.2 million, a 24.9% increase from revenue of $57.0 million in the March 2010 quarter and an 83.1% increase from revenue of $38.9 million in the June 2009 quarter.

• Net income for the third quarter was $16.0 million, or $0.57 per diluted share. This compares with net income for the March 2010 quarter of $7.2 million, or $0.27 per diluted share, and a net loss for the June 2009 quarter of $1.9 million, or $(0.08) per diluted share.

The Company currently expects its revenue for the September quarter to be between $74 million and $80 million and its gross margin to be between 34% and 37%. Operating expenses for the September quarter are expected to be in the range of $14.0 million to $14.7 million. Gains on sales of investments and interest and other income in the September quarter are expected to be approximately $0.8 million. As a result of the above, net income per share is expected to be between $0.42 and $0.52 per diluted share.

The stock has not reacted to these strong results, possibly due to the fact that analyst estimates have EPS growth stagnating, beginning in ISSI fiscal 2011 third quarter.

"We are very pleased with our results in the March quarter. Demand for our products was strong and exceeded our expectations in our target markets while DRAM pricing continued to improve. We also had one of our best quarters in new design wins," said Scott Howarth, ISSI's President and CEO. "In addition, the beginning backlog and orders to date for the June quarter have been the strongest we have seen in several years," added Mr. Howarth.

For June quarter, the Company currently expects:

• Revenue to be between $64 million and $70 million
• Gross margin to be between 34% and 37%.
• Operating expenses for the June quarter are expected to be in the range of $12.9 million to $13.4 million. 
• Net income per share is expected to be between $0.44 and $0.50 per diluted share.