SAN FRANCISCO—Chip vendor Zoran Corp. Monday (Oct. 25) cut its outlook for the remainder of 2010 after posting third quarter sales that came in slightly below consensus analysts' expectations. The company's chief executive said Zoran is exploring restructuring alternatives.
Levy Gerzberg, Zoran's president and CEO, said some of the company's key digital TV customers saw market share loss and price erosion in the third quarter and that one customer began buying parts from a second source during the quarter, causing additional market share loss for Zoran. Gerzberg said Zoran is seeing rising channel inventory and softening consumer demand in the digital TV segment and that the DVD segment is also showing signs of weakening demand, causing inventory build of red-laser products.
"As a result of these developments, we are reducing our outlook for the remainder of 2010 and are carefully evaluating our current strategies against existing and potential growth opportunities," Gerzberg said. "We are also in the process of working on restructuring alternatives with an emphasis on operating expenses to right size the business."
Zoran said it currently expects fourth quarter revenue to range between $60 million and $65 million, with gross margins ranging between 52 and 53 percent.
Zoran (Sunnyvale, Calif.) reported third quarter sales of $99.3 million, up 6 percent compared to the previous quarter, but down 14 percent compared to the third quarter of 2009. Consensus analysts' expectations called for Zoran to report sales of $99.8 million, according to Yahoo Finance.
Zoran reported a third quarter net loss in accordance with generally accepted accounting principles of $4.1 million, or 8 cents per share, narrowed from a GAAP net loss of $6.7 million, or 13 cents per share, in the previous quarter. In the year ago quarter Zoran reported a GAAP net income of $4.9 million, or 9 cents per diluted share.
On a non-GAAP basis, excluding charges, Zoran posted a net loss for the quarter of $810,000, or 2 cents per share, the company said. The non-GAAP figure excludes $2.5 million of stock-based compensation expense and $2 million in expenses related to Zoran's acquisition of Microtune Inc., announced last month.
"Management remains committed to returning Zoran to a growing and profitable business with a sound financial model, and we are working to take whatever steps are necessary to achieve this objective," Gerzberg said.
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