Spotlights of Spreadtrum Q409 earning release
With its releasing Q409 earnings report the company is finally turned around its business from a year ago under the leadership of the new management. By promoting Shannon Gao, vice president of finance and corporate controller, to CFO, the company completed its full cycle of new management replacement. Since it went public in 2007, its former CEO, CTO and CFO have left the company in pursuing of other opportunities. The former CTO, Chen, Datong, one of the company's founders, became a venture capitalist by joining north light venture capital. The former CFO, Richard Wei, joined Shanda Games Ltd. (NASDAQ, GAME), a public game company, as its CFO. Two months after resignation of CFO, the company announces David Wu as its CFO, which demonstrated a failed appointment upon announcing his departure after four months of serving as new CFO. The company turned direction to look inside and promote loyalty long serving employee Shannon Gao to its CFO. It's realistically good decision to stabilize the company's management, trust good loyalty employee rather than seek high profile and expensive officer. I will give my applause to the board's this appointment.
It's also the first time to hear CEO expressing confidence in its comments of earning release since he take tenure of CEO position. Look at his statement in Q409 "Despite an increasingly tough competitive environment, we remain confident in our ability to successfully execute on our strategy and drive long-term shareholder value. ", contrasts to its statement in Q309 "We still face several challenges such as unpredictable industry dynamics and the potential for political and economic changes that could impact the handset business. Competition in the GSM handset markets also remains tough." We'll see whether the confidence will realize into actual performance in following quarterly earning releases this year. So far the CEO's credit is really good since he consistently delivered what he had promised.
Spreadtrum wins China Mobile's subsidies program to design 3G chipset with sponsored manufacturers. We'll expect $12.9 million subsidies from the program due to second half of year 2010, which will offset its R&D expenses in Q3 and/or Q4. That'll contribute $10m more to the company's net income of this year despite its non-recurring nature of the subsidies. We'll also expect accelerated shipments of 3G baseband/RF chips from the company, which will occur high gross margin.
