On October 25th, 2010, Silicom Ltd. (SILC) announced results for the third quarter of fiscal year 2010 ending September 2010. Revenue for the period was $7.4 million rising 10.4% sequentially from $6.7 million and up 60.8% year over year.
Operating income for the quarter was $1.6 million, which equates to an operating margin of 21%, a five-fold increase compared with $333,000 in the third quarter of 2009, and an 11% increase compared with the second quarter of 2010.
Net income for the quarter was $1.4 million, or $0.21 per share (basic and diluted), up 316% compared with $346,000, or $0.05 per share (basic and diluted), for the third quarter of 2009. In the second quarter of 2010 net income for the quarter was $1.4 million, or $0.20 per share (basic and diluted).
Design Wins Piling Up
The firm announced three major wins that illustrate its growing momentum. In cooperation with a Fortune-100 industry giant, SILC achieved a breakthrough with SETAC Server-To-Appliance-Converter product line, selling SETAC-based solutions to a Tier-1 security leader in a deal that will generate $3 million for the firm in its first production year.
Further, SILC announced two important wins with the established networking server adapter product line: one with a data center-class WAN Optimization leader, and the other with a Japanese server manufacturer, an existing customer that has introduced the firm to another of its divisions.
Outlook
SILC seems primed to enter a new growth phase. The growth engine in the short term is three fold. The first is the growth of Server Adapters in security markets and optimization, the next growth engine is new customers as well as new product lines every quarter. The strength of the OEM business model is evident in that SILC can roll out new business and keep operating expenses in check.
Lastly, the evolution of 10GB server adapters should provide growth in the short term. SETAC, which enables branded high technology servers to be configured as hardware appliances, Should push Silicom’s revenues to a $100 million per year run rate.
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