Nordic Semiconductor Asa · OSL:NOD
Nordic Semiconductor Asa — Q3 2005 Earnings Presentation
27 slides from Nordic Semiconductor Asa's earnings presentation, Oct 19, 2005
Slide 1: Nordic Semiconductor ASA Q3 2005 Presentation
NORDIC SEMICONDUCTOR ASA Q3 - 2005 PRESENTATION Svenn-Tore Larsen CEO 19th of October, 2005
Slide 2: Flat revenue growth, increased earnings
FLAT REVENUE GROWTH, INCREASED EARNINGS Flat revenue growth from Q2 to Q3 Increased earnings, record result, 24% EBT margins Great launch of the new nRF24L01 device Important design wins throughout quarter World leading customers, designing with Nordic devices Multiple Sports and Audio customers ada
Slide 3: Key figures
KEY FIGURES MNOK, % Q3. 2005 Q3. 2004 Change 2004 Revenues 81.2 64.4 26 % 235.1 Operating profit (EBIT) 18.9 10.8 75 % 19.0 Earnings before taxes (EBT) 19.4 9.2 111% 13.5 Earnings per share (28% tax) 0.42 0.21 100 % 0.29 R & D charged to income 7.5 6.1 23 % 31.6 Booking 53.0 64.6 -18 % 244.5 Backlog
Slide 4: Profit and loss account
PROFIT AND LOSS ACCOUNT MNOK, % Q3. 2005 Q3. 2004 Change YTD - 2005 2004 Revenues Components 69.7 45.8 52% 181.8 170.1 Revenues Consulting 11.5 18.6 -38% 36.3 65.0 Total operating revenue 81.2 64.4 49% 218.1 235.1 Cost of goods sold -36.5 -23.4 55% -101.4 -91.3 Direct project costs -2.7 -4.9 -45% -7
Slide 5: Balance sheet
BALANCE SHEET MNOK, % Q3-2005 Q3-2004 Change 2004 Non-current assets 33.8 24.5 38% 27.9 Inventories 43.8 16.8 161% 16.5 Accounts receivables 73.9 39.3 88% 38.3 Other receivables 4.3 3.3 30% 8.1 Cash and cash equivalents 30.5 50.4 -39% 62.8 Total assets 186.3 134.3 39% 153.6 Shareholders equity 149.8
Slide 6: Main shareholders/stock options
MAIN SHAREHOLDERS/STOCK OPTIONS 30. Sep. 2005 Odin Norge 9.6% Arne Græe 5.6% Ferd Invest AS 5.3% Tore Engebretsen 4.6% Velox AS 4.2% Folketrygdfondet 4.1% Arne Kristian Mæland 3.5% Alden AS 3.4% Total number of Kjell Bråthen 2.6% shareholders: 885 ABG Sundal Collier 2.4% Foreign investors (47 shareh
Slide 7: Positive EBIT for nine consecutive quarters
POSITIVE EBIT FOR NINE CONSECUTIVE QUARTERS Quarterly Operating Income And Earnings MNOK 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 -5 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 -10 -15 Operating income Earnings before taxes, excluding social security tax (options) Nord
Slide 8: Components 85% of revenue
COMPONENTS 85% OF REVENUE Revenue Split 2002-2005 120 % 100 % 9% 17 % 6% 33 % SoC Projects 80 % 11 % 45 % 21 % IP-Data Con 14 % 60 % 16 % SoC Components 10 % Standard Components 40 % 25 % 27 % 63 % 59 % 20 % 26 % 18 % 0% 2002 2003 2004 2005-YTD Nordic Semiconductor 19-10-2005 -7-
Slide 9: Revenue for 2005 was estimated based on a segment model
REVENUE FOR 2005 WAS ESTIMATED BASED ON A SEGMENT MODEL… Standard Components Forecast Model 35 30 Wireless Audio Intelligent Sport Equipment 25 20 15 Mouse/Keyboard 10 Gamepad 5 Miscellaneous 0 jan feb mar apr mai jun jul aug sep Nordic Semiconductor 19-10-2005 -8-
Slide 10: Revenue for third quarter fell short of expectations in one segment
… BUT REVENUE FOR THIRD QUARTER FELL SHORT OF EXPECTATIONS IN ONE SEGMENT Nordic revenue has been driven by a strong position within the gaming segment This segment has shown weakness in the quarter and revenues lower than expected • Unexpected, not reflected in customers’ forecast nor through commu
Slide 11: Time-to-market longer than we want
TIME-TO-MARKET LONGER THAN WE WANT We are an aggressive, eager, and Average design to production time is 18 months optimistic organization. Engaging with large customers and projects. This requires an enthusiastic team Activity Many design-wins with world leading companies Production • Most of which
Slide 12: Continued healthy margins
CONTINUED HEALTHY MARGINS Contribution Margin (%) 70 We have reached and established a level for the 60 contribution margin according to plan 50 The transition from being a consulting company to a 40 component supplier has not negatively effected our margins 30 49.6 49.5 49.1 51.7 With our contribut
Slide 13: Segment shortfall reduced overall backlog
SEGMENT SHORTFALL REDUCED OVERALL BACKLOG Quarterly Operating Income, Booking And Backlog MNOK 120 100 80 60 40 20 0 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Revenue Booking Backlog Nordic Semiconductor 19-10-2005 - 12 -
Slide 14: Backlog do not include major new customers
BACKLOG DO NOT INCLUDE MAJOR NEW CUSTOMERS Rapid decline in gaming segment reflected low booking Large customer build cycle in Q3 not yet refilled for Q4 SoC Component orders wrong side of quarter end • Significant orders received early October New, large customers not yet reflected in backlog Short
Slide 15: Maintained high R&D activity
MAINTAINED HIGH R&D ACTIVITY R&D Investment MNOK 18 16 14 12 10 8 6 10.8 10.4 10.5 9.9 4 7.5 6.6 2 0 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Nordic Semiconductor 19-10-2005 - 14 -
Slide 16: One R&D department for components
WE HAVE CREATED ONE R&D DEPARTMENT FOR COMPONENTS All component R&D in one group Aligned organization to fit with existing work practice SoC Projects • Increase efficiency, innovation and synergy effects R&D R&D department will do both Components internal and external projects • Wireless components
Slide 17: Significant investment in test equipment
SIGNIFICANT INVESTMENT IN TEST EQUIPMENT In the semiconductor industry secured test capacity is a critical factor for success Nordic’s strategy is to invest in fully-owned testers to ensure reliable deliveries to our customers • Ensure deliveries • Efficient cost structure LTX Fusion RF is a scalabl
Slide 18: Investing in customer relationships
INVESTING IN CUSTOMER RELATIONSHIPS New Korea Office Established To further meet customer demands, we have established a sales office in Seoul, Korea • Staffed by native Norwegian Korea is a key market for our expansion into wireless audio applications Nordic has already an established base of custo
Slide 19: Segment shortfall impact revenue
SEGMENT SHORTFALL IMPACT REVENUE Standard Components Status Slight decline in quarterly revenue (Q2-Q3) 55.4 MNOK to 50.3 MNOK • Shortfall in gaming are offset by growth in other segments Revenue/Booking • 50.3 MNOK Revenue • 32.8 MNOK Booking Successful launch of nRF24L01 • Nordic’s best device eve
Slide 20: Lion – enhancing value, lowering cost, crushing competition
LION – ENHANCING VALUE – LOWERING COST – CRUSHING COMPETITION nRF24L01 Launch Message Developed in close cooperation with customers 6 months project start to tape- out First samples ahead of schedule Ready for volume Q4-2005 Customers Customers choose choose the the leading leading products products
Slide 21: nRF24L01 outperforms all competitors on wireless current consumption
nRF24L01 OUTPERFORMS ALL COMPETITORS WHEN WIRELESS CURRENT CONSUMPTION IS CONSIDERED Raw Power /Bit Average Current Consumption In 2-way Mouse nW/Bit uA 500 1000 450 830 400 400 800 350 300 600 250 200 200 400 380 150 120 100 200 54 100 50 38 12.5 41 0 0 Zigbee Bluetooth Chipcon Cypress LS2 nRF2401A
Slide 22: Transition from 27MHz to 2.4GHz products
PERFORMANCE, FEATURES AND COST REDUCTION WILL SHORTEN THE TRANSITION FROM 27MHz TO 2.4GHz PRODUCTS Unit Price Reduction For 2.4Ghz Technology Unit Price35 30 25 20 15 27Mhz->2.4Ghz transition threshold? 10 5 0 1H 04 2H 04 1H 05 2H 05 1H 06 2H 06 Nordic Semiconductor 19-10-2005 - 21 -
Slide 23: New segments will drive 2006 revenues
NEW SEGMENTS WILL DRIVE 2006 REVENUES Mouse and Keyboard (M&K) Gaming M&K Major design-wins throughout 2005 Highly uncertain about the and expect this trend to continue into outlook for this segment 2006 with existing and new customers Gaming 6-8 large customers using our New design wins driven by t
Slide 24: Solid growth trend for SoC components
SOLID GROWTH TREND FOR SOC COMPONENTS SoC Components Status Growth in quarterly revenue (Q2-Q3) from 16.8 MNOK to 19.4 MNOK Revenue/Booking • 19.4 MNOK Revenue • 11.2 MNOK Booking SoC Component orders wrong side of quarter end • Significant orders received early October New components will increase
Slide 25: The growth in SoC components continues
THE GROWTH IN SOC COMPONENTS CONTINUES MNOK 25 20 19.4 16.8 15 10 9.1 8.5 6.7 5.2 5.5 5 0 Q1-2004 Q2-2004 Q3-2004 Q4-2004 Q1-2005 Q2-2005 Q3-2005 Note: For Q1-2004, 900K USD exclude, Philips rights buyout Nordic Semiconductor 19-10-2005 - 24 -
Slide 26: Polar Electro new customer for Nordic
POLAR ELECTRO NEW CUSTOMER FOR NORDIC 05.10.05 Nordic has Successfully Completed an ASIC for a New Polar Electro Oy Intelligent Sports Equipment Platform Oslo, Norway - September 19th, 2005 - Nordic Semiconductor ASA (OSE: NOD) today announced that they have successfully developed an ASIC for Polar
Slide 27: Summary
SUMMARY Revenue lower than expected, but profits still very satisfactory Revenue impacted by significant loss of gaming business Continue to invest in customer relationships, organizational improvements and production capacity New market leading device, nRF24L01, released aimed at the keyboard and m