AOS Revenue Decline Reflects Declining Size of PC Industry and Loss of Share
Alpha and Omega Semiconductor Limited (AOS) reported revenue of $75 million for the fiscal third quarter ended March 31, 2013 compared with revenues of $83.9 million for the year-ago third quarter and $89.4 million for the second quarter of 2013. Gross margin was 7%, which reflected a non-cash, non-recurring inventory valuation charge of $7.7 million recorded during the third quarter. This charge primarily related to excess and obsolete inventory, consisting of PC-related products that were not compatible with a particular OEM's applications and were deemed not saleable.
Commenting on the results for the third fiscal quarter of 2013, Dr. Mike Chang, Chairman and Chief Executive Officer of AOS, stated, "Our results reflected the impact of an unprecedented sharp decline, and to a lesser extent a market share loss, in the PC industry."
Operating expense was $18.4 million, which included a non-cash charge of $2.6 million related to equipment write-down and reduction in capacity at the company's backend assembly and test facility. This equipment was primarily related to production capacity for packaging of PC related products that the Company has determined has been impaired due to the accelerated decline in the PC market. Including the impact of non-recurring charges, the Company reported a net loss for the quarter of $13.2 million, or $0.52 per share.
"We have taken aggressive actions to more closely align our cost structure to current revenue levels in response to the declining PC market. With respect to the market share loss, we are working diligently with a major OEM to recover market share with respect to their product requirements. More importantly, we continue to gain design traction in our product offerings in the Industrial and Power Supply, Gaming and LCD TV backlighting industries, as well as Power ICs for use in the next generation of advanced computing," said Dr. Chang.
"While current market conditions are unlikely to improve in the near term, we remain confident about our future strategy and expect to emerge from this downturn as a stronger and more diversified company with market leading positions in several growth industries. Our gross margins should rebound as revenue improves in future quarters."
