February 21, 2006 > ESS reports fourth quarter and fiscal 2005 results

ESS Technology, Inc. designs and markets high-performance digital video processor and imaging sensor semiconductors for the consumer digital entertainment, digital photography, camera phone and digital home markets. ESS products include highly integrated chips for DVD players, DVD recorders, VCD players, digital media players, digital audio systems, and camera-enabled cellular phones. ESS, headquartered in Fremont, Calif., has R&D, sales, and technical support offices worldwide.

This company (Nasdaq: ESST) reported net revenues for fourth quarter 2005 of $44.1 million compared to $43.1 million for the same period last year and compared to $48.6 million in third quarter 2005. GAAP net loss for fourth quarter 2005, which included the previously announced $42.7 million impairment of goodwill and intangibles, was $52.8 million, or ($1.33) per diluted share, compared to fourth quarter 2004s GAAP net loss of $20.9 million, or ($0.53) per diluted share.

For the third quarter of 2005, GAAP net loss was $11.1 million, or ($0.28) per diluted share. Non-GAAP net loss for fourth quarter 2005 was $10.0 million, or ($0.25) per diluted share, compared to the 2004 fourth quarter of non-GAAP net loss of $19.7 million, or ($0.50) per diluted share. For the third quarter of 2005, non-GAAP net loss was $10.5 million, or ($0.26) per diluted share. Non-GAAP net loss excludes amortization of intangible assets, impairment of goodwill and intangibles, and related tax effects. During the quarter, ESS settled a long-standing modem patent lawsuit for $8.1 million. Most of this settlement amount had been previously reserved so the fourth quarter 2005 impact was $700,000.

Robert Blair, president and CEO of ESS Technology, commented, "The fourth quarter of 2005 came in as expected with higher than anticipated margins mainly due to higher ASPs. Our previously announced Phoenix line of high performance DVD chips has been well received by the market and we have started transitioning our customers to that product."