Pixelworks Reports Continued Net Losses (PXLW 3Q05 Conf Call Quotes)

| About: Pixelworks, Inc. (PXLW)

Pixelworks (ticker: PXLW), whose chips power digital dispays, reported a net loss for 3Q05 of $5.3 million (11 cents/share) -- its fourth straight quarter of declining earnings, and a disappointing turn from profitability in 3Q04. Revenue was up 13% from last quarter, reaching $46.8 million. Lowered guidance for 4Q05 contributed to the 8% drop in PXLW stock since yesterday. Excerpts from the conference call:

CEO Allen Alley described Pixelworks' challenge to keep up with its high-growth industry:

Flat-panel televisions alone comprised of LCD and plasma TVs are expected to grow from 22 million units this year to 60 million units in 2008. The delivery of video via the Internet is growing every day. The introduction of the video iPod is the latest confirmation of this trend and is gaining momentum. We have made investments to take advantage of these opportunities, and we believe we must continue to make these investments. However, our short-term revenue is not increasing at the rate that allows us to continue to add the critical resources to execute our product roadmap.

And pricing in the LCD TV market:

The newest generation of LCD fabs... They're going to start pushing up into 60-inch, 70-inch, and maybe even 80-inch LCDs, which means 40-inch becomes that much more affordable. So I don't see any end in sight in terms of being able to push up to larger sizes and aggressively drive costs down. We are flirting with $1,000 30-inch and 32-inch LCD TV with the new LCD fabs that are going to be coming out with some of the new equipment, we'll push that down to 40 inches, and I think those are extremely compelling price points.

(Quotes are from the CCBN StreetEvents transcript.)