China Digital TV Holding Co., Ltd. (NYSE: STV) (“China Digital TV” or the “Company”), the leading provider of conditional access (“CA”) systems to China’sexpanding digital television market, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2010.
Highlights for the Fourth Quarter 2011
- Net revenues in the fourth quarter of 2011 were US$29.2 million, representing an 11.2% decrease from the same period in 2010 and a 12.7% increase from the third quarter of 2011. The year-over-year decrease was primarily due to a spike in smart card demand in the fourth quarter of 2010 caused by the year-end deadline for provincial cable network consolidation.
- China Digital TV shipped approximately 5.38 million smart cards in the fourth quarter of 2011, compared to 6.10 million in the same period in 2010 and 4.66 million in the third quarter of 2011.
- Gross margin in the fourth quarter of 2011 was 81.1%, compared to 80.8% in the same period in 2010 and 80.5% in the third quarter of 2011.
- Diluted earnings per American depositary share, or ADS, (one ADS representing one ordinary share), in the fourth quarter of 2011 were US$0.19, compared to US$0.15 in the same period in 2010.
Highlights for Full Year 2011
- Net revenues in 2011 were US$99.1 million, representing a 13.7% increase from 2010.
- China Digital TV shipped approximately 18.31 million smart cards in 2011, compared to 16.23 million smart cards in 2010.
- Gross margin was 80.7% in 2011, compared to 79.1% in 2010.
- Diluted earnings per ADS in 2011 were US$0.69 compared to US$0.57 in 2010.
“I’m proud to report that we delivered solid financial results in the fourth quarter of 2011, driven by continued momentum in smart card demand. The strong demand was a result of the ongoing cable network consolidation as well as cable operators investing in digitalization projects,” said Mr. Jianhua Zhu, China Digital TV’s chairman and chief executive officer. “In 2011, strong execution allowed us to solidify our market share and achieve a 12.8% annual growth in smart card shipment volume and a 13.7% annual increase in net revenues, surpassing outstanding results in 2010.”
Mr. Zhu continued, “Cable operators continued to invest in diversified pay-TV services in 2011, in light of the further progress in cable network consolidation and a higher degree of digital penetration. However, commercialization of those value added services were in the early stages and the pace of market adoption remains to be seen in 2012. Given the mixed market sentiment, we expect shipment of smart cards in 2012 to be in line with 2011 levels. Going forward, in addition to developing our core CA business, we plan to continue carrying out research and development of next generation products and service solutions, as well as expanding our business overseas.”
Mr. Zhenwen Liang, China Digital TV’s chief financial officer, commented, “Throughout 2011, China Digital TV focused on expanding our revenue potential through investments in research and development for value-added services. Meanwhile, we are committed to creating value for our shareholders by managing operating expenses and continuously enhancing operational efficiency.”
Fourth Quarter 2011 Results
(Note: Unless otherwise stated, all financial statement measures stated in this press release are based on generally accepted accounting principles in the United States (“U.S. GAAP”).)
In the fourth quarter of 2011, China Digital TV generated net revenues of US$29.2 million, a decrease of 11.2% from the fourth quarter of 2010 and an increase of 12.7% from the third quarter of 2011. The year-over-year decrease in net revenues was primarily due to a spike in smart card demand in the fourth quarter of 2010 caused by the year-end deadline for provincial cable network consolidation. The quarter-over-quarter increase in net revenues was principally due to an increase in revenues from smart card sales.
In the fourth quarter of 2011, revenues from the Company’s top five customers accounted for 25.8% of total revenues, compared to 29.7% in the third quarter of 2011.