June 24, 2009 / 9:46 PM / in 8 years

UPDATE 2-Canada's Gennum posts Q2 loss

* Q2 loss of $0.03/shr vs. $0.14/shr profit last year

* Revenue down 41 pct to $19.4 mln * Sees modest improvement in orders (Recasts, adds details)

June 24 (Reuters) - Canada’s intellectual property firm Gennum Corp GND.TO said it fell to a quarterly loss due to currency fluctuations and aggressive customer inventory reductions within the video broadcast market.

Quarterly gross margin fell to 70 percent from 75.5 percent a year ago, hurt by lower average selling prices and the under-absorption of fixed costs in its test operations due to reduced production, Gennum said.

However, the company said based on its order trends, the majority of its customers are close to completing their inventory correction.

“We are seeing modest improvement in orders and end market demand in all of our product groups. However, we continue to take aggressive steps to control our expenses to improve profitability and cash flow,” Gennum Chief Executive Franz Fink said in a statement.

In view of a slower than expected recovery in the video broadcast market, Gennum said it is taking aggressive steps to control its costs, improve profitability and cash flow.

For the latest second quarter, Gennum reported a net loss of $1.1 million, or 3 cents per share, compared with a net earnings of $4.8 million, or 14 cents per share, a year ago.

The company said it incurred a $3.3 million translation loss due to the strengthening of the Canadian dollar against the U.S. dollar.

Revenue fell 41 percent to $19.4 million in the quarter, hurt by global economic downturn and its resultant effects upon the markets for its products.

Higher revenue from IP licensing was offset by a drop in revenues from Analog and Mixed Signal (AMS) and Optical product groups.

AMS revenue dropped 50.5 percent to $12.9 million while Optical product revenue declined 19 percent to $3.3 million.

Gennum shares closed up 13 Canadian cents at C$4.20 Wednesday on the Toronto Stock Exchange. (Reporting by R. Manikandan in Bangalore; Editing by Gopakumar Warrier)

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