BEIJING -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro"), a leading multimedia semiconductor and surveillance solution provider, today announced financial results for the three months and full year ended December 31, 2010 and preliminary results for the three months ended March 31, 2011.
Fourth-Quarter 2010 Results
In December 2010, the Company divested certain non-core IC business lines as part of its updated strategy to focus on core businesses such as multimedia semiconductors and surveillance solutions. The Company is reporting results for continuing operations, and results from prior periods have been revised to be comparable.
Total net revenue in the fourth quarter of 2010, including continuing and discontinued operations, was $28.4 million, which exceeded the high end of the guidance range of $26 to $28 million provided in the third-quarter earnings release. Combined revenues increased 19.5% year over year and 7.0% sequentially.
Net revenue in the fourth quarter of 2010 from continuing operations was $24.4 million, compared to $23.2 million in the third quarter of 2010 and $19.8 million in the fourth quarter of 2009. These figures exclude $4.0 million, $3.3 million, and $3.9 million of revenue from discontinued operations in the fourth and third quarters of 2010 and the fourth quarter of 2009, respectively. The 22.8% year-over-year revenue increase derived from growth in all business lines, particularly from PC/notebook multimedia processors and surveillance. Fourth-quarter net revenue was up 5.0% sequentially.
"Our fourth-quarter net revenues showed healthy year-over-year growth and were also up solidly on a sequential basis," commented Dr. John Deng, Vimicro's Chairman and Chief Executive Officer. "Surveillance revenues more than doubled in 2010, representing a strong year and validating our new product platform, and we were also encouraged by the Standardization Administration of China's release of the SVAC standard on December 31, 2010. In the fourth quarter, we also experienced solid growth in revenues from sales of PC and notebook multimedia processors, as we introduced several new image processors that strengthen our position in the PC imaging market. Mobile-phone revenue remained flattish but began to soften for TD-SCDMA products in the fourth quarter."
Cost of revenue in Q4 was $17.3 million, compared with $16.0 million in the third quarter. The gross margin in the fourth quarter was 29.0%, compared with 30.9% in the previous quarter, the decrease due to changes in product mix.
Operating expenses in the fourth quarter of 2010 were $13.3 million, which includes $0.9 million of share-compensation expense, as compared to $12.4 million in the third quarter. Operating expenses increased sequentially due to investments to grow the surveillance business.
Non-GAAP net income attributed to Vimicro International Corporation, excluding $0.9 million in share-based compensation, was a loss of $5.3 million, or approximately $0.15 per ADS. Fourth-quarter 2010 GAAP net loss was $8.3 million.