SAN DIEGO, Sept. 16, 2014 (GLOBE NEWSWIRE) -- 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."
Entropic™ (Nasdaq:ENTR) is a world leader in semiconductor solutions for the connected home. The Company transforms how traditional HDTV broadcast and IP-based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Entropic's next-generation Set-top Box (STB) System-on-a-Chip (SoC) and Connectivity solutions enable Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by transforming the way digital entertainment is delivered, connected and consumed – in the home and on the go. For more information, please visit Entropic at: www.entropic.com, read our blog Entropic Topics, or get social with us at @Entropic_News, or on Facebook, Google+, YouTube and LinkedIn.
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Non-GAAP Financial Measures
This press release contains a reference to expected non-GAAP loss per share. Management uses non-GAAP financial measures to manage the Company's business, including setting operating budgets and executive compensation plans. These non-GAAP measures are also used to (i) supplement the financial results and forecasts reported to the Company's board of directors, (ii) evaluate the Company's operating performance, (iii) compare the Company's performance to internal forecasts, and (iv) manage the Company's business and benchmarking performance internally. The non-GAAP measures have been made available to stockholders consistently in the past to provide transparency on how management manages the Company's operating performance. Management believes that these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP measures, in evaluating Entropic's ongoing operational performance. Non-GAAP loss per share can be reconciled to GAAP loss per share by excluding the effects of all forms of stock-based compensation, transaction and integration costs related to the Company's prior acquisitions, amortization of intangible assets, the loss related to equity method investment, the impact of fair value adjustments related to contingent consideration payable in the Company's acquisition of PLX Technology assets, the cash tax difference, IP litigation costs and restructuring charges.
The non-GAAP financial measures disclosed by Entropic should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by Entropic may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Forward Looking Statements
Statements in this press release that are not strictly historical in nature constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding the exploration of strategic alternatives and expectations for future revenue, profitability and earnings per share. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Entropic's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties associated with estimating revenues and earnings per share prior to Entropic closing its books and verifying such information; Entropic's ability to successfully explore strategic alternatives and the impact of such an announcement on Entropic's business, including a potential adverse effect on revenues and Entropic's other financial results and its impact on employees, suppliers and customers; Entropic's ability to continue to attract and retain key engineering and management employees, Entropic's dependence on a limited number of supply chain partners for the manufacture of its products and other factors that could affect its ability to meet customer demand; Entropic's dependence on a limited number of customers for a substantial portion of its revenues; risks associated with adverse U.S. and international economic conditions; the ability of Entropic's customers or the service providers who purchase their products to successfully compete and continue to grow in their markets; the continued development of the market for High Definition (HD) video and other multi-media content delivery and networking solutions; risks associated with competing against larger and more established companies and Entropic's ability to compete successfully in the connected home entertainment market; risks associated with timely development and introduction of new or enhanced products including those associated with IP Video delivery; risks related to international operations; risks related to intellectual property, including third party licensing or patent infringement claims; risks associated with acquisitions including their integration with Entropic's operations; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
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