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WIKI ANALYSIS
Norwood, MA based LTX Corporation engages in the design, manufacture, and marketing of automatic semiconductor test equipment in the Unites States. It offers LTX Fusion platform, which combines enVision software with high-end Fusion HFi configuration and capable of testing a range of analog, digital, mixed signal, and SOC devices on a scalable single platform. The company's products are used in mobile Internet equipment, such as wireless access points and interfaces broadband access products, including cable modems and DSL modems personal communication products, such as cell phones and personal digital assistants consumer products including televisions, videogame systems, digital cameras, and automobile electronics and for power management in portable and automotive electronics. It also offers hardware and software support and maintenance services. The company's customers comprise semiconductor designers and manufacturers, integrated device manufacturers, and subcontractors.
The testing of devices is a critical step during the semiconductor production process. Typically, semiconductor companies test each device at two different stages during the manufacturing process to ensure its functional and electrical performance prior to shipment to the device user. These companies use semiconductor testing equipment to first test a device after it has been fabricated but before it has been packaged to eliminate non-functioning parts. Then, after the functioning devices are packaged, they are tested again to determine if they fully meet performance specifications. Testing is an important step in the manufacturing process because it allows devices to be fabricated at both maximum density and performance a key to the competitiveness of semiconductor manufacturers.
X series offers share gains and strong margins
Fusion offers a unique solution for testing the full spectrum of non-memory devices, consisting of SOC, mixed signal, and digital devices. The Fusion test platform provides customers with highly reliable test performance and cost-efficiency in their efforts to accelerate their time-to-market for SOC, mixed signal, and digital devices. The Fusion test platform combines test station hardware with our enVision software and is available in Fusion HFi, Fusion CX, Fusion DX, Fusion EX and Fusion MX configurations. These configurations depend primarily on the digital complexity of the device to be tested. Management reported a major European IDM chose the fusion MX as their next generation RF tester platform. This decision should lead to significant volume over the next several years.
Diversifying its revenue base
In fiscal years 2006, 2005 and 2004, Texas Instruments accounted for 56%, 47%, and 58% of net sales, respectively. The company is working to diversify its revenue base away from TXN spending. In the past quarter LTXX had 4 customers that each represents more than 10% of orders and 2 customers that represent greater than 10% of revenue.
Positive restructuring
Approximately nine months ago the company laid out plans to reduce the company's breakeven to 41 million by the end of the fiscal year. This was accomplished one quarter early and even with managements muted guidance for Q1 fiscal 2007, it was significantly above breakeven.
On July 31st 2006 the company paid down $61 million in convertible debt. Because of the company's positive cash flow, it was able to pay off the debt using existing cash balances. While cash balances may appear lower the net cash number is higher by approximately $8 million.
Bringing down backlog
The backlog at the beginning of the quarter was $105 million. During the quarter the company added $44 million in new orders and shipped $67.4 million to customers. In light of the slowdown management has taken a more realistic view of its existing backlog and taken out approximately $8.7 million in orders they believe may not be filled.
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