Zilog Inc, the semiconductor pioneer, has posted its first profit in two years. For its third quarter, the Campbell, California- based firm saw an operating income of $1.8m, compared with a loss of $17.5m in the third quarter of 1998. Revenue was up 23% to $64.5m from last year’s $52.5m. Sales for the nine months were $179.8m, up nearly 20% from last year’s $150.6m. Losses for the nine months were $12.5m, down from $68.5m during the same period last year.
Zilog said that it had seen across the board increases in sales, bookings, gross margins and earnings before interest. It’s the first operating profit since Curtis Crawford left Lucent to take over as CEO 20 months ago. Crawford focused the company’s activities on embedded systems, communications and home entertainment devices. The latter saw growth of 76% during the quarter, with 25% growth from communications and 10% growth from integrated controls products.
Gross margins nearly doubled to 38.8% from 19.9% last year, helped by Zilog’s decision to extend the life of machinary and equipment at its eight-inch wafer fab plant in Nampa, Idaho from five to seven years, decreasing depreciation during the quarter by $4.6m. Those benefits will continue to be felt over the first half of next year. During the quarter, Zilog announced the extension of its original Z80 line of processors as the eZ80 Internet Engine, and also announced the Wave communications chip family of wireless spread spectrum voice and data controllers.
Zilog was acquired in 1997 for $527m by the Texas Pacific Group. Earlier this year the company began expanding again, with the acquisition of fabless semiconductor company Seattle Silicon Corp. It employs 1,300 people.
