Entropic to explore strategic alternativesTuesday, September 16th, 2014
Company Updates Financial Guidance for Q3 2014
SAN DIEGO — Entropic (Nasdaq:ENTR), a world leader in semiconductor solutions for the connected home, today announced that its Board of Directors has authorized the evaluation of strategic alternatives to enhance shareholder value.
The Board intends to consider a wide range of alternatives available to the Company. The Company has engaged investment bank Barclays in connection with its efforts.
“Our Board of Directors and management are committed to taking the appropriate steps to enhance value for Entropic shareholders and we have determined that undertaking a thorough and deliberative evaluation of strategic alternatives, with the assistance of financial advisors, is in the best interests of the Company and all of our shareholders,” said Patrick Henry, president and chief executive officer, Entropic. “The entire Entropic team is fully committed to meeting the needs of our OEM customers and service provider partners and we will continue to provide them with industry-leading solutions for connected home entertainment throughout this process.”
There can be no assurance that the Board’s exploration of strategic alternatives will result in a transaction. The Company has not set a timetable for completion of this process and does not intend to disclose further developments unless and until its Board approves a specific action or otherwise concludes the review of strategic alternatives.
Business and Guidance Update
Entropic also announced revised financial guidance for the third quarter of 2014. Due primarily to less seasonal strength than was anticipated in the Company’s Direct Broadcast Satellite (DBS) Outdoor Unit (ODU) business, and to a lesser degree further weakness in legacy set-top box (STB) system-on-a-chip (SoC) products, Entropic now expects revenue for the third quarter to be approximately $43 million. The Company is making good progress on its previously announced restructuring plan and cost reduction efforts and therefore expects to be on the lower end of its previous guidance for operating expenses. The Company now expects non-GAAP loss per share of approximately $0.15, and GAAP loss per share of approximately $0.28, for the third quarter.
“We will give financial guidance for the fourth quarter on our next earnings call at the end of October, but based on our current forecast, we expect continued softness in the fourth quarter as we are again seeing new product deployment delays,” said David Lyle, chief financial officer, Entropic.
“Although we believe we have executed well on the product development front and have compelling products in the pipeline, delays in service provider product launches and shifts in service provider deployment architectures continue to affect our financial results,” said Mr. Henry. “We have won some key designs, and taken positive steps to lower our break-even and accelerate our path to profitability, but our transition is taking longer than anticipated. We remain focused on executing on the strategic and operational initiatives we announced earlier this year and returning the company to profitability.”