Silicom .(US:SILC)2024-02-01 18:42Financial Data and Key Metrics Changes - Revenues for Q4 2023 were $18.8 million, down from $45.2 million in Q4 2022, resulting in a net loss of $0.5 million compared to a net income of $6.6 million in the same quarter last year [14][30][21] - Gross profit for Q4 2023 was $5.3 million, representing a gross margin of 28%, compared to a gross profit of $15.1 million and a gross margin of 33.5% in Q4 2022 [30][14] - Operating expenses in Q4 2023 were $6.8 million, down from $7.2 million in Q4 2022, leading to an operating loss of $1.5 million compared to an operating income of $7.9 million in the previous year [30][14] Business Line Data and Key Metrics Changes - The company faced significant headwinds due to customer inventory adjustments, leading to reduced ongoing purchases and lower revenue levels [6][8] - Two large design wins from previous years are currently not generating additional purchase orders due to customers digesting existing inventory slowly [7][8] Market Data and Key Metrics Changes - Geographical revenue breakdown showed North America accounted for 85% of revenues, Europe and Israel 13%, and the Far East and Rest of the World 2% [14] - The company had one customer contributing over 10% of revenues, with the top three customers accounting for approximately 38% of total revenues [14] Company Strategy and Development Direction - The company initiated a new 5-year strategic plan aimed at generating significant shareholder value, focusing on returning to revenue growth and reducing expenses [8][13] - The strategic plan includes a focus on core server adapter and Edge solutions, discontinuing non-core programs such as O-RAN [35][36] - The company plans to repurchase approximately 1.6 million shares over the next two years, reflecting confidence in its financial position [26][30] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the global economic headwinds will ease in 2024, with Q1 2024 revenue expected to be between $14 million and $17 million [9][24] - The company expects to achieve about $70 million in revenue for 2024, impacted by current headwinds [24] - Long-term goals include increasing earnings per share to about $3 by 2028, with a gradual improvement in EPS expected [24][36] Other Important Information - The company reported a strong balance sheet with cash equivalents and marketable securities totaling $71.5 million and no debt [15][10] - An impairment charge of $9.6 million was recorded due to the termination of two programs, which is not included in non-GAAP numbers [38][30] Q&A Session Summary Question: What is left on the buyback? - The company has approximately $6 million left on the current buyback plan, which is scheduled to end in April 2024 [40] Question: Is there further trimming going to happen in the current quarter? - The company has completed the reduction of personnel from 310 to 240, and no further cuts are planned [42][43] Question: Have there been outright cancellations of projects? - There have been no outright cancellations, but demand has been reduced due to changes in customer focus [49] Question: What is the expected revenue trajectory for Q1? - The forecast for Q1 is between $14 million and $17 million, with expectations for better performance in the second half of the year [54]