EZchip CEO: Cisco is our largest customer [Globes, Tel Aviv, Israel]
(Globes (Tel Aviv) Via Acquire Media NewsEdge) Feb. 13--Ethernet network processor provider EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH) has reported robust revenue and profit growth for the fourth quarter of 2012, while CEO Eli Fruchter said that Cisco became the company's largest customer in 2012.
Revenue for the fourth quarter of 2012 was $15.2 million, up 7 percent from $14.3 million in the corresponding quarter of 2011, and up 64 percent from $9.3 million in the preceding quarter.
GAAP profit was $4.8 million ($0.17 per share), compared with a net loss of $6.0 million in the corresponding quarter, which included early repayment of a $9.9 million chief scientist grant. Non-GAAP profit for the fourth quarter of 2012 was $7.8 million ($0.26 per share), up from $6.3 million ($0.22 per share) in the corresponding quarter.
EZchip had a non-GAAP operating cash flow of $29.2 million for 2012 and $7.1 million for the fourth quarter, and net cash of $168 million at the end of 2012.
Total revenue for the year ended December 31, 2012 was $54.7 million, up 14 percent from $63.5 million in 2011. GAAP profit for 2012 was $15.7 million ($0.54 per share), double the GAAP profit of $7.9 million ($0.28 per share) in 2011. Non-GAAP profit in 2012 was $27.1 million ($0.92 per share) down from $31 million ($1.09 per share) in 2011.
Fruchter said, "2012 was another transition year for EZchip. First, we completed the transition to Cisco becoming our largest customer, with all revenues being royalty-based, thereby increasing our gross margins to 84 percent and maintaining our outstanding 49 percent net margin in line with the net margin we achieved in 2010 and 2011. Second, we transitioned to NP-4, which surpassed the NP-3 run rate in its first full production year, and became our largest revenue generator. Finally, we laid the foundation for the NPS line of network processors for smart networks that will target both next-generation edge routers and data centers, and we believe could double our total available market.
He added, "Of our five major NP-4 customers, two are in production and two entered production at the end of the third quarter and have placed initial production orders. The fifth customer, Huawei, is also expected to enter production in the first quarter; however, it has not yet placed any production orders and we believe Huawei may proceed to offer a lower-end in-house solution in parallel to the high-end NP-4 solution. Fruchter said, "Looking ahead, we believe that high-end NPUs, such as the NP-4, are required for high-end edge routers to be competitive. Therefore, based on the success of our customer products in the marketplace and the level of carriers' investment in Internet infrastructure, we believe NP-4 can significantly increase our revenues in the next few years. As for this year, we expect year-over-year growth in both Q1 and 2013, also when compared with 2011."
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