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Netlist reported financial results for the third quarter and nine months ended October 3, 2009. Revenues for the third quarter and nine months ended October 3, 2009, were $6.4 million and $11.8 million, respectively, compared to $28.9 million and $60.4 million for the third quarter and nine months ended September 27, 2008. Revenue for the 2009 third quarter doubled from the $3.2 million in this year’s second quarter.

The year-over-year decline in revenues was driven by a reduction in demand from the Company’s customer base mainly due to the commoditization of certain product offerings. In response to the current lower base of revenue, costs have been aggressively managed downward to better match those levels of revenue. The Company continues to invest heavily in R&D as it executes on the planned technology transition to its next-generation memory subsystems.

“We are very pleased by the progress of our next-generation product development,” Chief Executive Officer Chun K. Hong said. “We remain on track to launch the first of our new products before the end of the year. The improving market for high-performance computing, firming prices for memory and the early interest from OEMs in our chip-based technologies have given us reason for optimism as we look into 2010 and beyond.”

Gross profit for the third quarter ended October 3, 2009, was $1.6 million, or a gross margin of 24.3 percent, compared to $2.0 million, or a gross margin of 7.1 percent for the third quarter ended September 27, 2008. This is an improvement from the second quarter gross profit of $244,000, or a gross margin of 7.7 percent. Gross profit for the nine months ended October 3, 2009, was $1.3 million, or a gross margin of 10.8 percent, compared to gross profit of $7.8 million, or a gross margin of 13.0 percent in the year-earlier period.

Net loss for the 2009 third quarter was $2.1 million, or $0.11 loss per share, compared to a net loss in the prior year period of $7.4 million, or $0.37 loss per share. Net loss for the 2009 first nine months was $9.9 million, or $0.50 loss per share, compared to a net loss of $10.3 million, or a $0.52 loss per share. These results include stock-based compensation expense in the third quarter and nine months ended October 3, 2009 of $631,000 and $1.2 million, respectively, compared with $362,000 and $981,000 in the prior year periods.

During the third quarter, the Company remained focused on preserving cash. As of October 3, 2009, cash, cash equivalents, and investments in marketable securities were $16.4 million, total assets were $27.1 million, working capital was $14.5 million, total long-term debt was $192,000, and stockholders’ equity was $21.6 million.

As previously announced, Netlist is conducting a conference call today to be broadcast live over the Internet at 5:00 pm Eastern Time to discuss and review the financial results for the third quarter and nine months ended October 3, 2009. The dial-in number for the call is 1-877-941-8602. The live webcast and archived replay of the call can be accessed in the Investors section of Netlist’s website at www.netlist.com.

Netlist designs and manufactures high-performance memory subsystems for the server and high-performance computing and communications markets. The Company’s memory subsystems are developed for applications in which high-speed, high-capacity memory, functionality, small form factor, and heat dissipation are key requirements. These applications include tower-servers, rack-mounted servers, blade servers, high-performance computing clusters, engineering workstations, and telecommunication equipment. Netlist maintains its headquarters in Irvine, California with manufacturing facilities in Suzhou, China.

netlist, servers