Entropic Communications Reports Third Quarter Results

Entropic Communications Reports Third Quarter Results

Conference Call to be Webcast Today at 1:30 p.m. Pacific Time

SAN DIEGO, Oct. 24, 2012 (GLOBE NEWSWIRE) -- Entropic Communications, Inc.
(Nasdaq:ENTR), a world leader in semiconductor solutions for the connected
home, today reported its third quarter results for the period ended September
30, 2012. Entropic reported third quarter net revenues of $89.8 million, an
increase of eight percent compared with $83.1 million in the second quarter of

In accordance with U.S. generally accepted accounting principles (GAAP), the
Company's third quarter net income was $0.4 million, or $0.00 per share
(diluted). This compares with GAAP net income of $0.2 million, or $0.00 per
share (diluted) in the second quarter of 2012.

Non-GAAP net income in the third quarter of 2012 was consistent with the
second quarter at $7.8 million, or $0.09 per share (diluted).

"Entropic delivered record quarterly revenue in Q3 with strength across our
entire product portfolio," said Patrick Henry, Entropic's president and chief
executive officer. "Momentum continues to build around the connected home
market and we saw solid design-win traction during the quarter. We have a
great portfolio of products, an expanding addressable market and we're
benefitting from one of the most significant trends impacting the industry:
the transition to IP video delivery in the home."

                          Three Months ended
(In millions, except per   September 30, 2012 June 30, 2012 September 30, 2011
share data)
Net revenues               $89.8              $83.1         $51.5
GAAP net income           $0.4               $0.2          $4.6
GAAP net income per share  $0.00              $0.00         $0.05
(basic and diluted)
Non-GAAP net income^1      $7.8               $7.8          $10.4
Non-GAAP net income per    $0.09              $0.09         $0.12
share^1 (diluted)
1.Please refer to "Non-GAAP Financial Measures" below and the financial
statements portion of this press release for an explanation of the non-GAAP
financial measures contained in the table above and a reconciliation of such
measures to the comparable GAAP financial measures.

Recent Highlights

Corporate Leadership


    *Mr. Vahid Manian joined Entropic as senior vice president of Global
      Operations. Manian leads Entropic's technical and supply management
      operations, worldwide.
    *Mr. William G. Bock joined Entropic's Board of Directors. Bock brings to
      Entropic's Board a wealth of semiconductor sector, corporate leadership
      and board experience.

  *Board Affiliation: The RVU Alliance announced the election of Entropic to
    its Board of Directors. A member of the RVU Alliance, Entropic has
    actively supported the marketing and technical activities of the Alliance
    since its inception in August 2009, and has long-standing partnerships
    across the RVU Alliance ecosystem.

Industry Accolades

  *MoCA® (Multimedia over Coax Alliance) Innovation: The DIRECTV Home Media
    Center (HMC), based on the RVU protocol, was shortlisted as a finalist for
    the IBC Content Delivery Innovation Award. DIRECTV's HMC uses Entropic's
    MoCA silicon and software to enable the sharing and distribution of high
    definition (HD) content into and around the home.

Product Innovations

  *Entropic Demonstrated HTML5 Content Distribution with its Open Standards
    Set-Top-Box (STB) Platform Over a MoCA 2.0 Home Network: At both CableLabs
    Summer Conference 2012 and IBC2012, Entropic demonstrated the ability to
    run next-generation HTML5 consumer applications from an Entropic-based STB
    over an Entropic-powered MoCA 2.0 home network.

Service Provider/OEM Activities

  *EchoStar Now Shipping HD Satellite STBs Enabled by Entropic's
    System-on-a-Chip (SoC) and Demodulator Technology: Entropic announced the
    deployment of its STB SoC and demodulator technology in three EchoStar
    models, currently being deployed at Bell Canada, Dish Mexico and Telus.
    Entropic's technology enables EchoStar to offer fully-functional HD
    satellite STBs, which are PVR-ready via external hard drives. The devices
    also support over-the-top (OTT) and interactive applications via an
    Internet connection.
  *EchoStar's Freeview+ HD Ultra Slim Box Features Entropic's STB SoC:
    Entropic announced EchoStar's Ultra Slim Box, an advanced HD digital TV
    recorder combining Freeview+ HD and access to Smart TV entertainment, uses
    Entropic's highly-integrated, low-power STB SoC, the PNX849x, to deliver
    advanced performance and power management to execute heavyweight
  *GlobalSat's Hybrid STB Powered by Entropic's SoC Solutions: Entropic
    announced its PNX8471 SoC will power GlobalSat's GOOSAT S1-44HD, an
    advanced hybrid STB. The device leverages Entropic's ARM® Cortex™-A9-based
    SoC for enhanced performance, security, and support for OTT video
  *Inverto Delivers Latest Generation Low Noise Block (LNB) Using Entropic's
    Channel Stacking Switch (CSS): Entropic announced Inverto Digital Labs is
    deploying Entropic's third-generation CSS silicon, the EN5288, in
    Inverto's latest LNB solution for the Free-to-Air (FTA) and Pay-TV
    operator markets. The first product to market with Entropic's EN5288, the
    Inverto LNB allows consumers to upgrade and extend existing satellite
    installations without the need to run additional in-home cabling.
  *Entropic Achieves CI+ Certification on IP4.tv Hybrid STB: Entropic
    announced it achieved Common Interface Plus (CI+) certification for
    IP4.tv's latest IP+DVB-S2 hybrid STB, which enables Pay-TV operators to
    securely deliver HD premium broadcast and IP content between a Conditional
    Access Module (CAM) and IP4.tv's hybrid STB. This particular STB is aimed
    at the Pay-TV operator market and was deployed with a major European
    operator in August 2012.
  *TiVo's Premiere 4 Uses Entropic's MoCA Technology: Entropic announced its
    MoCA silicon and software are powering the new TiVo® Premiere 4 DVR. The
    TiVo Premiere 4 leverages Entropic's MoCA technology to transform the
    home's coaxial infrastructure into a highly-efficient, robust and reliable
    whole-home entertainment network.
  *Entropic Seeds European Service Providers with MoCA Ethernet-to-Coax
    Adapters (ECAs) and STBs: Entropic announced multiple ECAs are using its
    MoCA silicon and software to support service providers throughout Europe.
    New Entropic-powered ECAs include devices from Asheridge Communications
    and Hirschmann Multimedia BV, as well as the Entropic-enabled Samsung
    MoCA-based gateway that is being deployed for a major European service
    provider this year.

For More Information

Entropic management will be holding a conference call today, October 24, 2012,
at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time to discuss the Company's
results for the third quarter of fiscal 2012 and to provide guidance for the
fourth quarter. You may access the conference call via any of the following:

Teleconference: 617-213-4860
Access Code:     78027545
Web Broadcast:  http://events.entropic.com/
Replay:         617-801-6888
Replay Passcode: 35589872

About Entropic Communications

Entropic Communications, Inc. (Nasdaq:ENTR) is a leading global provider of
silicon and software solutions to enable connected home entertainment. The
Company transforms how traditional HDTV broadcast and streaming video content
is seamlessly, reliably, and securely delivered, processed, and distributed
into and throughout the home. Entropic's next-generation home connectivity and
set-top box system-on-a-chip (SoC) solutions enable Pay-TV service providers
to offer consumers a more captivating whole-home entertainment experience by
delivering new, high-performing ways to connect, engage, and enjoy multimedia
content. For more information, visit Entropic at: www.entropic.com.

The Entropic Communications logo is available at

Non-GAAP Financial Measures

This press release and the accompanying tables contain the following non-GAAP
financial measures: net income and net income per share.These non-GAAP
financial measures exclude the effects on the Statement of Operations of all
forms of stock-based compensation, transaction and integration costs related
to the Trident Microsystems and the PLX Technology transactions, amortization
of intangible assets, the loss related to equity method investment, the impact
of contingent consideration fair value adjustments related to the acquisition
of PLX Technology assets, and the cash tax difference.

Management uses these non-GAAP financial measures to manage the Company's
business, including setting operating budgets and executive compensation
plans. These non-GAAP measures are also used to (i) supplement the financial
results and forecasts reported to the Company's board of directors, (ii)
evaluate the Company's operating performance, (iii) compare the Company's
performance to internal forecasts, and (iv) manage the Company's business and
benchmarking performance internally. The non-GAAP measures have been made
available to stockholders consistently in the past to provide transparency on
how management manages the Company's operating performance. Management
believes that these non-GAAP operating measures are useful to investors, when
used as a supplement to GAAP measures, in evaluating the Company's ongoing
operational performance.

The non-GAAP financial measures disclosed by the Company should not be
considered in isolation or a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP, and the financial
results calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP financial
measures used by the Company may be calculated differently from, and therefore
may not be comparable to, similarly titled measures used by other companies.

Forward-Looking Statements

Statements in this press release that are not strictly historical in nature
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include, but are
not limited to, statements regarding our expectations for Entropic's market
penetration and overall market expansion, continued and/or future revenue,
earnings and product sales growth and the factors that may contribute to such
growth including industry trends. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause
Entropic's actual results to be materially different from historical results
or from any results expressed or implied by such forward-looking statements.
These factors include, but are not limited to, our dependence on a limited
number of supply chain partners for the manufacture of our products and other
factors that could affect our ability to meet customer demand; our dependence
on a limited number of customers for a substantial portion of our revenues;
risks associated with adverse U.S. and international economic conditions; the
ability of our customers or the service providers who purchase their products
to successfully compete and continue to grow in their markets; the continued
development of the market for HD video and other multi-media content delivery
and networking solutions; risks associated with competing against larger and
more established companies and our ability to compete successfully in the
connected home entertainment market; risks associated with timely development
and introduction of new or enhanced products including those associated with
IP Video delivery; risks related to international operations; risks related to
intellectual property, including third party licensing or patent infringement
claims; risks associated with the Trident Microsystems and PLX Technology
acquisitions including their integration into Entropic's existing operations;
and other factors discussed in the "Risk Factors" section of Entropic's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. All
forward-looking statements are qualified in their entirety by this cautionary
statement. Entropic is providing this information as of the date of this
release and does not undertake any obligation to update any forward-looking
statements contained in this release as a result of new information, future
events or otherwise.

Entropic Communications® and the stylized Entropic "curve" logo are either
trademarks or registered trademarks of Entropic Communications, Inc. in the
United States and/or other countries.

GAAP Condensed Consolidated Statements of Operations
(In thousands, except for per share information)
                  Three Months Ended                  Nine Months Ended
                  September   June 30,    September   September   September
                   30, 2012    2012        30, 2011    30, 2012    30, 2011
                  (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Net revenues       $89,825   $83,052   $51,465   $231,980  $184,459
Cost of net        45,778     40,197     22,996     111,886    82,581
Gross profit       44,047     42,855     28,469     120,094    101,878
Research and       28,072     25,671     15,142     69,214     42,439
Sales and          6,966      6,975      4,073      18,986     13,196
General and        5,718      8,584      2,939      19,592     10,143
Amortization of    930        715        --         1,645      --
Total operating    41,686     41,945     22,154     109,437    65,778
Income from        2,361      910        6,315      10,657     36,100
Loss related to
equity method      (799)      (905)      (91)       (2,536)    (91)
Other income, net  31         246        224        567        626
Income before      1,593      251        6,448      8,688      36,635
income taxes
Income tax         1,185      78         1,803      4,214      12,379
Net income         $408      $173      $4,645    $4,474    $24,256
Net income per     $0.00     $0.00     $0.05     $0.05     $0.28
share - basic
Net income per     $0.00     $0.00     $0.05     $0.05     $0.27
share - diluted
Weighted average
number of shares
used to compute    88,399     87,991     86,541     87,913     85,993
net income per
share - basic
Weighted average
number of shares
used to compute    90,885     89,484     88,884     89,918     89,165
net income per
share - diluted

GAAP Condensed Consolidated Balance Sheets
(In thousands)
                                       September 30, June 30,    December 31,
                                       2012          2012        2011
                                       (unaudited)   (unaudited) 
Current assets:                                                 
Cash and cash equivalents               $22,511     $22,435   $20,193
Marketable securities                   90,560       92,536     91,625
Accounts receivable                     36,104       41,491     25,896
Inventory                               39,532       38,172     20,253
Deferred tax assets, current            13,658       14,785     13,565
Prepaid expenses and other current      23,323       29,692     9,927
Total current assets                    225,688      239,111    181,459
Property and equipment, net             14,969       13,078     11,250
Long-term marketable securities         53,255       46,773     104,708
Intangible assets, net                  49,953       43,708     --
Deferred tax assets, long-term          9,953        9,600      9,600
Goodwill                                4,664        4,013      --
Other long-term assets                  9,501        10,477     11,542
Total assets                            $367,983    $366,760  $318,559
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                        $20,083     $29,683   $11,559
Accrued expenses and other current      16,005       12,683     4,078
Accrued payroll and benefits            13,057       11,727     3,835
Total current liabilities               49,145       54,093     19,472
Deferred rent                           727          849        1,098
Other long-term liabilities             1,307        209        196
Stockholders' equity                    316,804      311,609    297,793
Total liabilities and stockholders'     $367,983    $366,760  $318,559

Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except for per share information)
This press release contains the following non-GAAP financial measures: net income and net
income per share.The presentation of such measures is not intended to be considered in
isolation or as a substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP.Our non-GAAP net income and net income per share
exclude the items listed below.
The following table sets forth such non-GAAP measures for the applicable periods as well
as the reconciliation of such measures to the directly comparable GAAP measures for the
periods shown.
                   Three Months Ended                        Nine Months Ended
                   September 30, June 30, 2012 September 30, September 30, September 30,
                    2012                        2011          2012          2011
                   (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
GAAP net income     $408        $173        $4,645      $4,474      $24,256
Cost of net         217          179          143          567          390
Research and        2,030        1,894        1,533        5,554        4,597
Sales and marketing 675          585          517          1,679        1,445
General and         1,283        977          933          3,182        2,994
Total stock-based   4,205        3,635        3,126        10,982       9,426
Amortization of                                                         
intangible assets:
Cost of net         2,025        1,777        --           3,802        --
Operating expenses  930          715          --           1,645        --
Transaction and     183          2,754        --           4,484        --
integration costs
Loss related to
equity method       799          905          91           2,536        91
Adjustments to the
fair value of PLX
acquisition         230          --           --           230          --
Income tax effects
of pre-tax          (2,930)      (3,425)      (1,126)      (8,288)      (3,331)
Cash tax difference 1,899        1,301        3,653        6,357        14,607
^ (1)
Total of non-GAAP   7,341        7,662        5,744        21,748       20,793
Non-GAAP net income $7,749      $7,835      $10,389     $26,222     $45,049
Weighted average    88,399       87,991       86,541       87,913       85,993
shares (basic)
Adjustment for      2,486        1,493        2,343        2,005        3,172
dilutive shares
Weighted average    90,885       89,484       88,884       89,918       89,165
shares (diluted)
GAAP net income per $0.00       $--        $0.05       $0.05       $0.28
share (basic)
adjustments         0.09         0.09         0.07         0.24         0.23
detailed above
Non-GAAP net income
per share           $0.09       $0.09       $0.12       $0.29       $0.51
(1) The Company's non-GAAP net income per share is calculated using the cash tax rate of
22%, 22%, and (7%) for the three month periods ended September 30, 2012, June 30, 2012,
and September 30, 2011, respectively.The Company's non-GAAP net income per share is
calculated using the cash tax rate of 19% and 2% for the nine month periods ended
September 30, 2012, and 2011, respectively.The estimated cash tax rate is the estimated
tax payable on the Company's projected tax returns as a percentage of estimated annual
non-GAAP pre-tax net income.The Company uses an estimated cash tax rate to adjust for
the historical variation in the effective book tax rate associated with the reversal of
valuation allowances, the utilization of research and development tax credits, and the
utilization of loss carryforwards which currently have an overall effect of reducing
taxes payable.The Company believes that the cash tax rate provides a more transparent
view of its operating results.The Company's effective tax rate used for the purposes of
calculating GAAP net income for the three month periods ended September 30, 2012, June
30, 2012, and September 30, 2011 was approximately 74%, 31% and 28%, respectively.The
Company's effective tax rate used for the purposes of calculating GAAP net income for the
nine month periods ended September 30, 2012 and 2011 was approximately 49% and 34%,

CONTACT: Investor Relations Contact:
         Debra Hart
         +1 858.768.3852
         Media/Industry Analyst Contact:
         Chris Fallon
         +1 858.768.3827

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