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Venice, Florida — Yesterday, at the close of business on Wall Street, Magma Design Automation Inc. reported revenue of $45.7 million for its first quarter of fiscal 2009, compared to revenue of $50.2 million reported for the first quarter of fiscal 2008, a 8% decline.
"The first quarter proved to be a more difficult business environment than we anticipated, a situation that we believe may continue throughout at least a portion of the remainder of our fiscal year. Our key products and technology continue to deliver compelling solutions, but customers are experiencing softening demand in some of their end markets and we believe the first quarter results reflected delays in their purchases of design software as well as changes in our sales channel," said Rajeev Madhavan, chief executive officer. "Given this assessment of market conditions and recent changes in our sales channel, we lowered our full-year guidance. The new target is consistent with our intent to increase the portion of our revenue based on backlog to 90 percent or more of revenue in future periods."
Specific Results
In accordance with generally accepted accounting principles (GAAP), Magma reported a net loss of $(14.9) million, or $(0.34) per share (basic and diluted), for the first quarter ended Aug. 3, 2008, compared to a net loss of $(11.3) million, or $(0.29) per share (basic and diluted), for the first quarter of fiscal 2008.
The company non-GAAP net income was $.7 million for the first quarter, or $0.02 per share (diluted), which compares to non-GAAP net income of $4.6 million, or $0.10 per share (diluted), for the first quarter of fiscal 2008.
Non-GAAP net income for the first quarter of fiscal 2009 excludes the effects of amortization of developed technology, amortization of intangible assets, amortization of deferred stock-based compensation, amortization of debt issuance costs and debt discount accretion, charges associated with losses in equity investments, restructuring charges, acquisition-related expenses and the tax effects of these adjustments. Non-GAAP net income for the first quarter of fiscal 2008 excluded the above items and litigation settlement costs and related legal expenses.
In the first quarter Magma used approximately $6.4 million of cash in operations.
Business Outlook
Magma is changing its business model in that from now on, it intends to achieve a revenue mix whereby 90 percent or more of revenue in a period comes from Magma's backlog and the remainder comes from transactions completed in the period. Consistent with this new model, for Magma's fiscal 2009 second quarter, ending Nov. 2, 2008, the company expects total revenue in the range of $34.0 million to $35.0 million. GAAP net loss per share is expected to be in the range of $(0.70) to $(0.68) and non-GAAP loss per share is expected to be in the range of $(0.20) to $(0.18). For fiscal 2009, ending May 3, 2009, the company expects total revenue in the range of $158.0 million to $160.0 million. GAAP net loss per share is expected to be in the range of $(1.93) to $(1.89) and non-GAAP loss per share is expected to be in the range of $(0.19) to $(0.15).
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