Actions Semiconductor Co., Ltd. (Nasdaq: ACTS) ("Actions Semiconductor" or "the Company"), one of China's leading fabless semiconductor companies that provides comprehensive portable multimedia and mobile internet system-on-a-chip (SoC) solutions for portable consumer electronics, today reported its financial results for the fourth quarter and year ended December 31, 2014.
All financial results are reported on a U.S. GAAP basis.
Revenue for the fourth quarter of 2014 was $13.9 million, as compared to revenue of $13.1 million for the third quarter of 2014, and $17.6 million for the fourth quarter of 2013.
Revenue for the year ended December 31, 2014 was $50.3 million, compared to $69.4 million for the year ended December 31, 2013.
Net loss attributable to Actions Semiconductor's shareholders for the fourth quarter of 2014 was $12.2 million or $0.206 per basic and diluted American Depositary Share ("ADS"). This compares to net loss attributable to Actions Semiconductor's shareholders of $9.2 million or $0.137 per basic and diluted ADS, for the third quarter of 2014, and net loss attributable to Actions Semiconductor's shareholders of $0.8 million or $0.012 per basic and diluted ADS, for the fourth quarter of 2013.
Net loss attributable to Actions Semiconductor's shareholders for the year ended December 31, 2014 was $30.4 million or $0.461 per basic and diluted ADS. This compares to a net income attributable to Actions Semiconductor's shareholders of $0.1 million or $0.002 per basic and diluted ADS, for the year ended December 31, 2013.
Actions Semiconductor reported gross margin of negative 19.2% for the fourth quarter of 2014, compared to gross margin of 14.6% for the third quarter of 2014, and 22.2% for the fourth quarter of 2013. Gross margin was impacted by fierce competition in the tablet market and a significant inventory write-down that reduced margin by nearly 30%. The Company ended the fourth quarter with $168.2 million in cash and cash equivalents, together with time deposits, trading securities and marketable securities.
Since the share repurchase program commenced in 2007, the Company has invested approximately $79.4 million in repurchasing its ADSs and ordinary shares, including $25.0 million representing the equivalent of 10.0 million ADSs repurchased through a Dutch auction tender offer in September 2014. As of December 31, 2014, the equivalent of approximately 33.9 million ADSs were repurchased.
"In the fourth quarter of 2014, revenue came in toward the low end of our expectations, primarily due to the lingering effects of a supply shortage of wafers for multimedia products from our foundry, along with relatively flat demand and persistent, intense competition in the worldwide tablet market. Negative gross margin, along with a non-cash impairment charge of intangibles related to the reorganization of our corporate structure contributed to the loss for the quarter," stated Dr. Zhenyu Zhou, CEO of Actions Semiconductor.
"As our financial performance demonstrates, 2014 was a challenging year for Actions. Despite these challenges, we were steadfast in our commitment to invest in our future and expect to generate strong results in the year ahead. We are optimistic the recent launches of two new chipsets based on 28 nm process technology, including our ultra-high performance 64-bit, quad-core solution, the ATM9009, will allow us to compete more effectively in the application processor market including the tablet market, the OTT set-top box market and other cloud connected device market. These value-added application processor markets will move Actions beyond tablets into new and profitable growth markets. In our multimedia business, Bluetooth will be the driving force in 2015 and beyond. We expect our newly launched single-chip Bluetooth 4.0 solution for boomboxes, speakers, headphones and related products will establish Actions as a significant player in the rapidly growing Bluetooth voice and music market."
"Supported by these recent product launches, we are targeting revenue growth of 20% to 25% and a good margin improvement in 2015. We will also focus on cost control, with the goal of reducing operating expenses from 2014 levels," Dr. Zhou concluded.
Business Outlook
The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements.
Based on current market trends, the Company expects revenue in the first quarter of 2015 to be in the range of $9.5 to $11.5 million. The Company's newly launched products are not expected to contribute to first quarter results, as sales volumes will begin to ramp in the second quarter of 2015. In addition, the first quarter of the year is traditionally the seasonally slowest quarter due to the Chinese New Year holiday, which causes a slowdown in production by consumer electronics manufacturers in China for approximately three to four weeks.
