Gennum Reports 2009 Third Quarter Results

Burlington, Ontario (September 23, 2009) - Gennum Corporation (TSX: GND) today reported unaudited financial results for the third quarter of fiscal 2009.

(in millions of U.S. dollars except per share amounts)

"In the third quarter we saw customer demand strengthen resulting in Gennum achieving 10% revenue growth compared to last quarter," said Dr. Franz Fink, President and CEO of Gennum. "Customer lead times are increasing and we are encouraged by the improving market demand for our products. We continue to be focused on controlling our expenses to improve profitability and cash flow. We remain confident in our strategy and are executing to our plan in delivering more new products to our customers."

Gennum revenue in fiscal 2009 has been significantly impacted by the economic downturn and related actions taken by customers to reduce inventory. In the third quarter of 2009, customers began to restock inventory, resulting in our consolidated revenue growing over 10% sequentially compared to the second quarter of 2009. This increased revenue allowed Gennum to deliver positive operating income of $0.3 million in the quarter, before restructuring costs. We continue to see improvements in bookings and endmarket demand entering the fourth quarter of 2009.

On a year-over-year basis, consolidated revenue in the third quarter of 2009 was $21.4 million, lower by $12.1 million or 36% compared to the third quarter of 2008; on a year-to-date basis, consolidated revenue was $60.1 million, down by $36.4 million compared to the same period last year.

Gross margin as a percentage of revenue in the third quarter of 2009 was 69%, down from 76% in the same quarter of 2008. This decrease was primarily caused by lower production in Gennum operations as we continue to adjust inventories for lower levels of demand. Gross margin is expected to return to average corporate levels as demand increases and costs in our operations are reduced as a result of the significant restructuring activity which we began to implement in August.

Total operating expenses of $14.4 million in the third quarter of 2009, before the restructuring charge, decreased 20% from $18.1 million in the same period last year. The restructuring action resulted in a charge of $5.5 million in the quarter. This charge includes severance costs associated with a reduction in the workforce, the impairment of deferred development costs and the impairment of inventory. Operating expenses are expected to continue to decline as a result of the actions taken.

Operating income in the third quarter of 2008 was $7.5 million. The 2009 third quarter operating loss of $5.2 million included the restructuring charge and deferred development impairment of $5.5 million and bad debt expense of $0.5 million.

As the restructuring action demonstrates, we continue to proactively take steps to ensure the company returns to profitability by aggressively managing discretionary spending, minimizing capital expenditures, and aligning sales, marketing and administrative investment with short-term and mid-term customer revenue generation activities. We have maintained investment in key R&D programs enabling us to deliver a significant number of new products in 2009 and capitalize on new customer opportunities.

Net loss from continuing operations for the third quarter and for the first nine months of 2009 was $4.3 million or $0.12 loss per share and $6.2 million or $0.18 loss per share respectively, compared to net earnings for the same periods in 2008 of $6.4 million or earnings per share of $0.18 and net earnings of $16.9 million or earnings per share of $0.48.

New product introductions and business developments

In the third quarter of 2009, Gennum participated in key technology demonstrations and launched new products and IP further expanding its PCI Express offerings.

• Gennum Debuts PCI Express 3.0 IP, Showcases Bridging Solutions for HD Video - at the PCI-SIG Developers Conference, Gennum showcased the industry's first public demonstration of a PCIe 3.0 PHY, as well as demonstrations of PCIe 2.0 and SATA IP in a PCIe SATA bridge. Gennum also demonstrated 3 gigabits live video capture using Gennum's PCIe 2.0 solutions, underscoring the potential for PCIe in SDI video applications.
• Gennum's Snowbush IP Group Delivers the Industry's First PCI Express 3.0 PHY IP on TSMC 40nm Process - Gennum introduced its Snowbush IP PCIe 3.0 PHY and Controller. The new PCIeR 3.0 cores can be licensed immediately by system-on-a-chip (SoC) and system companies, enabling early deployment of PCIe 3.0 (Gen 3) in systems.

Dividend
Gennum's Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on October 21, 2009 to shareholders of record on October 7, 2009.

Download the complete financial results (PDF)

About Gennum
Gennum Corporation (TSX: GND) designs innovative semiconductor solutions and intellectual property (IP) cores for the world’s most advanced consumer connectivity, enterprise, video broadcast and data communications products. Leveraging the company’s proven optical, analog and mixed-signal products and IP, Gennum enables multimedia and data communications products to send and receive information without compromising the signal integrity. An award winner for advances in high definition (HD) broadcasting, Gennum is headquartered in Burlington, Canada, and has global design, research and development and sales offices in Canada, Mexico, Japan, Korea, Germany, United States, Taiwan, India and the United Kingdom. www.Gennum.com.

Gennum Media Contact:
Keri Fraser
Gennum Corporation
613-270-0458 x 2909
keri.fraser@gennum.com

Gennum Investor Relations Contact:
Gord Currie
Senior Vice-President, Finance & Administration and CFO
Gennum Corporation
(905) 632-2999 x3060
gord.currie@gennum.com

Caution Regarding Forward-Looking Information
This news release contains statements which constitute forward-looking statements. These forward-looking statements are not descriptive of historical matters and refer to management’s expectations or plans. These statements include but are not limited to statements concerning: Gennum’s plans and expectations relating to improvements in profitability and cash flow and the achievement of business model targets and levels, the reduction of corporate and operations costs and capital expenditures and marketing, sales and administration expenses; expected operational expense savings and estimated severance and related costs, and the estimated charges relating thereto and to impairments; and Gennum’s business objectives and future financial performance and prospects. Inherent in forward-looking statements are risks and uncertainties beyond Gennum’s ability to predict or control including but not limited to risks associated with: Gennum’s ability to complete the actions referred to in this news release within anticipated timeframes and to successfully realize the expected improvements therefrom; compliance with local employment legislation and requirements and the possible initiation and outcome of legal proceedings; and other risks facing Gennum’s business including competitive and pricing pressures and economic cycles in the semiconductor industry, fluctuations in foreign exchange rates and their potential adverse impact upon Gennum’s financial results, and Gennum’s ability to attract and retain key personnel necessary for its business. Please also refer to the sections entitled “Risks and Uncertainties” in Gennum’s 2008 annual report and “Risk Factors” in Gennum’s annual information form dated February 23, 2009. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such statements are based on a number of assumptions which may prove to be incorrect including but not limited to the following assumptions: Gennum is able to successfully complete the actions referred to herein within the timeframe and with associated expense savings generally as anticipated and without unforeseen significant costs or delays; assumptions relating to severance and related costs and to charges; customer demand for Gennum’s products remains generally as anticipated; Gennum’s is able to execute its product roadmap without delays or disruptions having a material impact on Gennum; Gennum’s expectations relating to competitive pressures, including pricing pressures, are not materially incorrect; significant fluctuations in foreign exchange rates which significantly adversely affect Gennum’s financial results do not arise; and Gennum is able to continue to retain and attract technical and other key employees. Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause Gennum’s actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Consequently, readers should not place any undue reliance on these forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. Gennum disclaims any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.