Power Integrations Continues Investigation, Reports Q1 Revenue
Power Integrations reported net revenues of $35.3 million for the quarter ended March 31, 2006, down from $37.9 million in the prior quarter. The decline was primarily attributed to lower revenues from the computer and communications markets, partially offset by growth in consumer revenues. Computer revenues were lower due primarily to a decrease in shipments related to desktop PCs. Communications revenues declined primarily as a result of short-term product transitions at the company's power-supply customers.
The company expects to release its complete first-quarter results and hold a conference call following the conclusion of a previously announced internal investigation of company practices related to stock-option grants to officers and directors, and related matters. The company also expects to file its Form 10-K for 2005 and its Form 10-Q for the first quarter of 2006 after the conclusion of the investigation. The company added that it expects the investigation to cost between $4 million and $5 million in total, with approximately $2 million accrued in the company's operating expenses for the first quarter.
"We believe that first-quarter revenues were down largely as a result of quarter-to-quarter fluctuations and product transitions," said Balu Balakrishnan, president and CEO of Power Integrations. "We are anticipating a stronger second quarter, as bookings strengthened considerably in the latter half of March and we began the second quarter with our highest opening backlog in more than three years.
"We had another good quarter in terms of design wins, featuring several high-volume programs for cellphone chargers, DVD players, desktop PCs and other applications, and numerous designs to replace linear power supplies," continued Balakrishnan. "While California intends to delay energy standards until July 2007 on some product categories, standards for cellphone chargers and many other external power supplies are still scheduled to go into effect at the end of 2006. These standards, combined with the rapidly rising prices of commodities such as copper, iron and plastics, continue to drive linear replacement. Revenues for LinkSwitch, our family of linear-replacement products, increased 60 percent sequentially during the first quarter and comprised 8 percent of revenues.
"Overall, we remain very optimistic about 2006, and we expect to deliver double-digit revenue growth for the full year," Balakrishnan concluded.
The company noted that it expects net revenues for the second quarter to be between $37 million and $39 million. The company intends to provide a more detailed second-quarter outlook at the time it releases its complete first-quarter results.