01—Abstract
Summary
Summary of the 10-K filed March 12, 2012. Cited figures are marked; the original filing is the authoritative source.
Monolithic Power Systems Inc. (MPWR) is a fabless semiconductor company specializing in advanced analog and mixed-signal integrated circuits (ICs), primarily focusing on power management solutions.
In 2011, the company experienced a revenue decline of 10.2% to $196.5 milliona, primarily attributed to lost Korean customers due to production capacity issues in 2010. Despite this, the company maintains a strong gross margin of 51.7% and continues to invest in research and development, which represented 22.7% of revenue in 2011. The company operates globally, with a significant portion of its revenue (90% in 2011) derived from Asia.
Its core product family, DC to DC converters, drives the majority of its sales. MPWR faces intense competition in the cyclical semiconductor industry but differentiates itself through highly integrated, compact, and efficient solutions. Key risks include dependence on Asian markets, potential pricing pressures, and ongoing litigation, though the company has a substantial cash reserve and positive operating cash flow.
02—Key points
Key Highlights
- Revenue decreased by 10.2% to $196.5 million in 2011, primarily due to lost customers in Korea from 2010 capacity issues.
- Gross margin remained strong at 51.7% in 2011, though down from 55.5% in 2010, impacted by pricing, test costs, and inventory reserves.
- 90% of 2011 revenue was derived from customers in Asia, indicating significant geographic concentration.
- DC to DC converters remain the dominant product family, accounting for 84.2% of revenue in 2011.
- The company invested $44.5 million in R&D (22.7% of revenue) in 2011, highlighting a commitment to innovation.
- MPWR maintained a healthy cash position with $96.4 million in cash and cash equivalents and positive operating cash flow of $43.7 million in 2011.
- Significant risks include competition, dependence on a few key distributors, potential for excess inventory, and ongoing legal proceedings, particularly concerning tax audits.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Monolithic Power Systems kept $0.07.
- Revenue$196.5M100.0%
- Cost of revenue−$94.9M48.3%
- Gross profit$101.6M51.7%
- Operating costs−$88.2M44.9%
- Operating income$13.4M6.8%
- Interest, other & tax−$116,0000.1%
- Net income$13.3M6.8%
Where FY2011 revenue went
$196.5M- Cost of revenue: $94.9M, 48% of revenue
- R&D: $44.5M, 23% of revenue
- SG&A: $40.3M, 20% of revenue
- Net income: $13.3M, 6.8% of revenue
- Other operating costs: $3.4M, 1.7% of revenue
Kept 6.8% as net incomeNet income $13.3M · 6.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed March 12, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $196.52M$218.84M | −10.2% |
| Cost of Revenue | $94.92M$97.38M | −2.5% |
| Gross Profit | $101.59M$121.46M | −16.4% |
| R&D Expenses | $44.52M$44.37M | +0.3% |
| SG&A Expenses | $40.28M$41.17M | −2.2% |
| Operating Expenses | $88.18M$90.96M | −3.1% |
| Operating Income | $13.42M$30.50M | −56.0% |
| Net Income | $13.30M$29.56M | −55.0% |
| EPS (Basic) | $0.39$0.83 | −53.0% |
| EPS (Diluted) | $0.38$0.78 | −51.3% |
| Shares Outstanding (Basic) | 34.05M36K | +94932.1% |
| Shares Outstanding (Diluted) | 35.16M38K | +92851.9% |
05—Questions
Frequently Asked Questions
What was the primary driver for Monolithic Power Systems' revenue decline in 2011?
The primary driver for the revenue decline in 2011 was the loss of certain customers in Korea. This was a consequence of production capacity shortages experienced in 2010, which led these customers to seek alternative suppliers.
How does Monolithic Power Systems differentiate its products in a competitive market?
Monolithic Power Systems differentiates its products by offering highly integrated, compact, and energy-efficient analog and mixed-signal semiconductors. These solutions are designed to be more accurate and cost-effective compared to many competing offerings.
What are the key financial metrics and trends for Monolithic Power Systems as of the filing date?
For the year ended December 31, 2011, revenue was $196.5 million, a decrease from $218.8 million in 2010. Gross profit was $101.6 million, with a gross margin of 51.7%. Net income was $13.3 million. The company maintained strong liquidity with $96.4 million in cash and cash equivalents and generated $43.7 million in operating cash flow.
What are the main risks highlighted by Monolithic Power Systems in its 2011 10-K filing?
Key risks include the highly cyclical nature of the semiconductor industry, significant revenue concentration in Asia (90% in 2011), intense competition, potential for excess inventory due to inaccurate demand forecasting, dependence on third-party manufacturers, intellectual property litigation, and ongoing tax examinations by the IRS which could result in significant liabilities.
06—Continue