Power Integrations Inc. (NASDAQ:POWI) Q4 2014 Earnings Conference Call - Final Transcript
Feb 04, 2015 • 04:45 pm ET
Good afternoon. I'd like to welcome everyone to the Power Integrations fourth quarter 2014 results call. (Operator instructions) Joe Shiffler, you may now begin your conference.
Thank you. Good afternoon, and thanks for joining us to discuss Power Integrations' financial results for the fourth quarter of 2014. With me on the call are Balu Balakrishnan, president and CEO of Power Integrations; and Sandeep Nayyar, our chief financial officer. During today's call, we will refer to financial measures not calculated according to Generally Accepted Accounting Principles. Please refer to today's press release available on our website at investors.power.com for an explanation of our reasons for using such non-GAAP measures as well as tables reconciling these measures to our GAAP results. (Forward-Looking Cautionary Statement)
And now, I'll turn the call over to Balu.
Thank you, Joe, and good afternoon. Fourth quarter revenues came in about the midpoint of our projected range at $86.6 million, while non-GAAP earnings were $0.59 per share, benefitting from expense control plus the reinstatement of the R&D tax credit.
For the full year, revenues were $349 million, just a slight increase from 2013. This performance is clearly not up to our expectations, and I'll focus my remarks today on the reasons we expect to deliver better results in the coming year. First, we expect a turnaround in the communications end market in 2015. While sales into the consumer, industrial, and computer markets grew in 2014, communications revenues declined by nearly 15%. This was due in part to soft demand at our two largest end customers, but also reflected increased commoditization in mobile phone chargers, which make up a substantial portion of our communications revenues.Starting in 2015, rapid charging presents an opportunity for differentiation that hasn't existed in the
charger market in recent years. The increased power requirements of rapid charging create technical hurdles for engineers in terms of form factor, efficiency, and component counts, which in turn creates a need for innovative, highly integrated products like ours. We are now in high-volume production for rapid charging designs at several top tier mobile phone OEMs, including both the world's largest and fastest-growing smartphone vendors, and we expect revenues from this market to ramp throughout the year.
The second growth driver for 2015 is the start of the promising new product cycle led by the revolutionary new InnoSwitch family. InnoSwitch is the first IC product to integrate both primary and secondary sides of the power supply, resulting in drastically reduced complexity, size, and energy consumption. Rapid charging is an ideal application for InnoSwitch, but the product is also well-suited for a wide range of other applications, and we are seeing a strong customer response since launching of the product for general availability in November. Demand for InnoSwitch actually exceeds supply for the current quarter, and we expect a healthy increase in sales beginning in Q2 as our production catches up to demand.
A third key driver for 2015 will be energy efficiency, which remains a secular trend across all of the