TranSwitch Corporation Announces Fourth Quarter 2011 Financial Results

SHELTON, CT – February 3, 2012 – TranSwitch Corporation (NASDAQ: TXCC), a leading provider of semiconductor solutions for the converging voice, data and video network, today announced financial results for the fourth quarter ended December 31, 2011.

Net revenues for the fourth quarter of 2011 were approximately $6.3 million, as compared to net revenues of $6.7 million for the third quarter of 2011 and $10.1 million for the fourth quarter of 2010.  Net loss for the fourth quarter of 2011 was ($11.9) million, or ($0.39) per basic and diluted common share, as compared to a net loss of ($4.8) million, or ($0.16) per basic and diluted common share for the third quarter of 2011, and a net loss of ($1.8) million, or ($0.08) per basic and diluted common share for the fourth quarter of 2010. The Company's fourth quarter results include non-cash goodwill and intangible impairment charges aggregating $14.3 million related to an acquisition made by the Company in 2008 partially offset by a $6.9 million reversal of accrued restructuring liabilities due to an amendment to a sublease for approximately 93,000 square feet of excess office space.  This amendment extends the sublease through May 2017.

The GAAP gross margin for the fourth quarter was 58%. This is compared to the Company's GAAP gross margin of 65% for the third quarter of 2011, and 64% for the fourth quarter of 2010.

Total non-GAAP operating expenses for the fourth quarter of 2011 were $7.7 million, as compared to $7.4 million in the third quarter of 2011 and $7.3 million in the fourth quarter of 2010. Non-GAAP operating expenses for the fourth quarter of 2011 exclude $0.1 million in amortization of purchase price intangibles, $0.5 million in stock-based compensation, $14.3 million in goodwill and intangible impairments, and benefits of $0.3 million and $6.9 million from the reversal of accrued royalties and restructuring liabilities, respectively. Total GAAP operating expenses for the fourth quarter of 2011 were $15.4 million, as compared to $8.8 million in the third quarter of 2011 and $8.0 million in the fourth quarter of 2010.

Non-GAAP operating loss for the fourth quarter of 2011 was ($4.1) million, compared to a non-GAAP operating loss of ($3.1) million for the third quarter of 2011 and a non-GAAP operating loss of ($0.9) million for the fourth quarter of 2010.  On a GAAP basis, the operating loss for the fourth quarter of 2011 was ($11.8) million, compared to an operating loss of ($4.5) million for the third quarter of 2011 and an operating loss of ($1.6) million for the fourth quarter of 2010.

Non-GAAP net loss for the fourth quarter of 2011 was ($4.2) million, or ($0.14) per share, compared with a non-GAAP net loss of ($3.3) million, or ($0.11) per share, for the third quarter of 2011 and a non-GAAP net loss of ($1.1) million, or ($0.05) per share, for the fourth quarter of 2010.  

Further information about non-GAAP measures is provided below and a reconciliation of the non-GAAP measures to the comparable GAAP results is provided after the financial statements attached to this release.

“We continue to make steady progress toward our strategic goal of developing a new growth engine in the video connectivity market,” stated Dr. M. Ali Khatibzadeh, President and CEO of TranSwitch Corporation. “During the quarter, we announced our first customer for HDplay™ products and recently introduced HDwire™ as the world’s fastest video interface solution for flat-screen panels.  HDwire™ delivers record throughput while significantly reducing the cost and complexity of video interconnects inside TV’s and computer monitors.”

Additional details on TranSwitch’s fourth quarter 2011 financial results will be discussed during a conference call regarding this announcement today at 8:30 am Eastern time. To listen to the live call, investors can dial 719-325-4750 and reference confirmation code: 2399041. The call will be recorded and a replay will be available two hours after the conclusion of the live broadcast through February 17, 2012.  To access the replay, dial 719-457-0820 and enter confirmation code: 2399041.  Investors can also access an audio webcast which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com or the Company’s website at www.transwitch.com. This audio webcast will also be available on a replay basis for 10 business days.

View: TranSwitch Q4 2011 Earnings