SAN JOSE, Calif. - Amid ongoing problems with its foundry ramp with IBM Corp., Ramtron International Corp., a supplier of ferroelectric-based memory, on Thursday (April 21) reported total revenue of $10.6 million for the first quarter of 2011, compared with $15.8 million for the same quarter last year.
Net loss for the first quarter of 2011 was $2.4 million, or minus $0.09 per share, compared with a net income of $415,000, or $0.02 per share, for the first quarter of 2010. First-quarter 2011 results included stock-based compensation expense of $347,000, and an income tax benefit of $1.4 million.
It's been a tough time for Ramtron. In January, the company accepted the resignation of Ramtron CEO Bill Staunton. At the time, Eric Balzer, Ramtron’s CFO and a member of the company’s board, was named CEO.
And for some time, IBM has been struggling with its foundry ramp for Ramtron-a move that has created a shortfall in sales and angered customers. In 2009, Ramtron entered into a foundry services agreement with IBM. The companies installed Ramtron’s FRAM semiconductor process technology in IBM's Burlington, Vt.-based wafer manufacturing facility.
At that time, Ramtron expected to generate first production wafers during 2010 on IBM’s 0.18-micron wafer manufacturing process. IBM became Ramtron’s second foundry supplier for its FRAM semiconductor products, along with Texas Instruments Inc.
To date, IBM has failed to deliver. IBM was supposed to make products on a foundry basis for Ramtron by the end of 2010. IBM is ramping up a ''FRAM-on-a-CMOS process.''
In the meantime, TI is picking up the foundry slack for Ramtron. Fujitsu Ltd. is still making products on a foundry basis for Ramtron as part of an older deal, but Ramtron is phasing out Fujitsu.
During a conference call on Thursday (April 21), Balzer described Ramtron’s first quarter as being ''strong operationally but weak financially due to supply constraints.’’
Balzer said that he has been ''personally monitoring the supply chain’’ concerning the foundry ramp with IBM, but the delay in bringing up foundry production has hurt the memory maker.
Most of Ramtron’s customers are ''staying with us,’’ but ''they are not pleased what’s happening,’’ he acknowledged.
On the conference call, one analyst even said: ‘’I’m pissed that I lost so much money on the stock.’’ The analyst apparently held shares in Ramtron. On Jan. 19, Ramtron's shares were selling at $3.13. On Friday (April 23), the stock was hovering at $2.39.
Ramtron is still working on ''bringing up the IBM manufacturing line,’’ but to date, the company is only ''sampling prequalification devices’’ from IBM’s fab, he said.
The most recent devices from IBM’s foundry fab ''are not as robust as we like,’’ he said. Ramtron hoped the FRAM devices would pass extended test times of 1,000 hours, but ''we lost one bit in the memory,’’ he said.
Balzar said that this was ''not acceptable’’ for Ramtron. The company is ''making final process improvements to strengthen device retention performance,’’ he said. ''Next silicon due to be tested over next six weeks.’’
“We made significant progress during the first quarter toward relieving our current supply constraints,” said Balzer in a statement. “With our wafer capacity effectively doubling this quarter, we are now working to expand our test capacity to support the increased wafer volume. Once we bring our wafer production into equilibrium with our test capacity during the second quarter, we will be in a position to satisfy our solid backlog of orders and resume revenue growth.”
Going forward, the outlook is mixed. “Based on the progress we have made to resolve supply chain issues and continued strong demand, we are confident that we will meet our guidance for revenue of $25 million for the first half of the year,” added Balzer.
“However, R&D investments are expected to remain above historical levels as we work as quickly as possible to bring up our new manufacturing line. As a result we anticipate a break even or slightly profitable second quarter. Our outlook for the full-year remains unchanged with anticipated total revenue of $65 to $70 million and GAAP net income of $0.10 per share,” Balzer concluded.