Despite reporting a second quarter net loss, chip designer Parthus Technologies today said that it was on track to reach profitability by next year.
Parthus shares rose this morning, but slipped back 4.5% to 52 pence by the close of business, after the company reported a net loss of $5.06 million, compared with a figure of $7.9 million the same time last year.
Licensing and royalty revenues increased by 95% year on year to $72 million, while revenues from licences and royalties grew to 70% of total revenue. This compares with 60% in the first quarter.
John Coolican, analyst at Merrion Capital, said the results were good when set against the difficulties the semi-conductor is going through. 'The results show a healthy spread of revenues across different sectors in the last quarter,' he said.
The company said that, excluding amortisation and non-cash stock compensation from acquisitions, its net loss amounted to $3.3 million. This was less than market expectations of $3.8 million. The total revenues for the second quarter were $10.2 million - up 30% on the year.
During the three months, Parthus agreed 10 new licensing and royalty deals with one portfolio deal and three new customers. The company said it was less affected by a slowdown in the consumer market, because the proportion of its revenue that came from royalties was low - less than 1% of total revenue in Q2.
In its results statement, Parthus said the current trading climate in the semiconductor industry made it difficult to give a clear picture of future earnings. But the company said it was still confident of reaching profitability in 2002 and added that its long-term prospects remained strong.
Yesterday its UK rival ARM Holdings reported a 46% rise in second quarter profits, beating the market consensus forecast, as growing licensing technology income offset royalty declines.
Parthus Chief Executive Brian Long said he was pleased with the company's results against the backdrop of a very sharp decline in the semiconductor industry.
'The second quarter of 2001 was our fifth successive quarter as a public company during which we exceeded our targets. We are confident of the underlying strength of our business model and our target of a return to profitability in 2002,' he said.
He added that Parthus was to some extent protected from the market downturn because its customers, including Sharp and STMicroelectronics, continued to spend on research and development. In continuing the search for new products, the companies ensure their place in the market for mobile devices when more favourable market conditions return.
