Newport Beach-based chipmaker Mindspeed Technologies Inc. has met several milestones in its turnaround plan laid out in November.
The company has reached operating profitability, boosted sales in its high-performance analog business, and ramped up production for the market of small cell base stations, according to Chief Executive Raouf Halim.
“I’m very happy to report that we have met or exceeded all three goals,” Halim told analysts on a recent conference call.
The turnaround bid yielded adjusted profits of $1.7 million and a 31% year-to-year increase on sales in the December quarter, to $44 million. Mindspeed beat Wall Street expectations on both.
The company reported operating expenses of $22.2 million for the quarter, hitting another goal of bringing down costs to levels last seen before the January 2012 buy of U.K.-based chipmaker Picochip Ltd. for $51.8 million, with another $25 million in potential benchmark payments.
Mindspeed implemented a restructuring plan last year as it integrated Picochip.
The plan called for a cut of more than 80 jobs, saving about $13 million annually, and bringing companywide employment to about 500.
Mindspeed makes chips for routers, switches and other networking gear.
Picochip makes systems-on-a-chip for small cell base stations, a growth market fueled by a race to 4G supremacy among the nation’s largest wireless carriers.
Campbell-based research firm Mobile Experts LLC predicts small cell base station shipments will grow to 24 million units by 2016.
Mindspeed projects sales in the segment to double to more than $1 million this quarter, driven by demand in Korea and other Asian markets.
The company counts more than 50 wireless carriers using its software and Picochip products.
Mindspeed notched six design wins in the December quarter, positioning it for growth in the wireless markets in India and China—the largest in the world with some 1.6 billion subscribers, led by China Mobile, Reliance and BSML.
“We’re in the lead in the world’s first LTE small cell deployment,” Halim said.
WD’s Silver Lining
Global hard disk drive sales are pegged for a double-digit decline this year as more consumers turn to smart phones and tablets for storage needs.
Revenue is expected to drop to about $32.7 billion in 2013, down 11.8% from last year, according to Englewood, Colo.-based market tracker IHS Inc.
Margins are also expected to dip as solid state drives, which use chips instead of spinning disks to store data, gain adoption.
There is a silver lining for disk drive makers such as Irvine-based Western Digital Corp., the biggest maker of hard drives in the world in terms of units sold.
“HDDs will continue to be the dominant form of storage this year, especially as demand for ultrabooks picks up and hard drives remain essential in business computing,” according to IHS storage systems analyst Fang Zhang.
Hard disk drives are significantly cheaper than solid state drives, with average selling prices expected to dip 7% this year. The corporate segment is pegged for growth this year amid growing demand for cloud storage and data analytics.
Western Digital has made recent strides to diversify its revenue streams and move further into the corporate segment.
Western Digital’s recent acquisition of Carlsbad-based Arkeia Software Inc. aims to boost market share among small and medium-sized businesses. Arkeia makes data backup software and provides other services such as data deduplication.
Last year’s $4.3 billion buy of Hitachi Global Storage Technologies Ltd. brought gains in corporate drives—a more lucrative segment than the consumer market.
The company is expected to release a 5-terabyte hybrid helium drive later this year geared for data centers and corporate servers.
Boost Plays Hoops
Irvine-based Boost Mobile LLC has signed No. 1 draft pick Anthony Davis to pitch its NBA Game Time Plus app, which features live radio broadcasts, game video, alerts, real-time scores and stats.
The app is free with Boost Mobile Android monthly and daily plans, and it’s downloadable from the Google Play Store.
The company is running a joint promotion with the New Orleans Hornets power forward to give away 10 Samsung Galaxy SII 4G smart phones through its Facebook page. The campaign also includes radio, social media, digital advertising and local marketing events.
Boost, a unit of Overland Park, Kan.-based Sprint Nextel Corp., is a no-contract, prepaid carrier.
It operates in one of the most competitive telecom segments, where customers are free to leave carriers and choose other providers at any point without penalty.
Competitors include Dallas-based rival MetroPCS Communications Inc., T-Mobile USA Inc. in Bellevue, Wash., San Diego-based Cricket Communications Inc., and smaller regional players.
Boost stands to see a financial boost if regulators approve Japan-based Softbank Mobile Corp.’s $20.1 billion deal to take a 70% stake in parent Sprint.
