the 2009 Annual Report (pdf) - PLX Technology

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To PLX Stakeholders: PLX is positioned at the core of significant technology trends affecting our lives. Every day, information technology needs in both our businesses and personally are going through radical change. Information is now being shared through new models, such as social networking on a personal basis and cloud computing in the business realm. PLX is at the heart of this revolution. Data centers are the lifeblood of all this information and consist of massive amounts of interconnected server clusters. No longer is it just Intel and Microsoft, but it’s the new-economy companies like Google, Amazon and Facebook that are the drivers of this instant-data revolution. These companies run on high-density servers and demand performance leading to more complex I/O structures, highly networked infrastructures and increased performance. Data centers need reliable, cost-effective and power-efficient interconnects to scale data processing capabilities. PLX’s PCI Express solutions are the most effective way to meet these escalating needs. This high-speed, low-power switching structure gives systems the horsepower to efficiently get the ultimate desired business result. At home, information technology is driven mostly from local digital storage demand. PLX’s storage solutions sit at the heart of external storage solutions and are critical for timely information availability. Our network-attached-storage solutions allow users to share video, pictures and music with every media center in the home. Web-enabled sites including YouTube and social networking are the drivers of this need for distributed personal content. PLX enables the protection and sharing of this data efficiently as it is as critical to you personally as it is to the businesses we enable in massive data centers. Our customers put their reliance on PLX solutions for data distribution and storage both in their business and at home. We are enabling this converged information technology revolution. Photo courtesy Fusion-io Besides the positive advancement in this technology revolution, we were fighting an economic upheaval in 2009. PLX started the year with one of the worst quarters in a decade and ended the year with the company’s best quarter since 2000. PLX is here to serve its customers but also to make money and drive value. We made some difficult decisions early in the year to resize the company in response to the economic situation. This made PLX a much more streamlined organization of 200 people strong. The resilience of our organization showed through executing and delivering key new innovative products during 2009, as well as becoming significantly profitable in the fourth quarter. Let me put some more color around our three families. Photo courtesy Iomega Consumer Storage is an application-specific interconnect product play. We develop very complex system-on-a-chip (SoC) products with the applicable software to implement entire hard drive systems for you to add on to your home PCs. Our software development is critical in adding differentiated features for our customers. In 2009, we eliminated a significant amount of very low-margin business to make this a healthy business with excellent growth potential. Our growth is coming in the expanding network-attach-storage segment. This connects your storage unit via Ethernet to your home network. This trend is growing as it gives you the ability to share videos, pictures and music with multiple devices in your home. We expect that this capability will go beyond just pure storage products as this capability is integrated into many other consumer “boxes.” Photo courtesy WD
Our Enterprise Switching business is focused on proliferating PCI Express through the data center and beyond. This technology is currently used in servers, storage and communications products that service the rapidly expanding data center market. The trend here is to expand data centers to support huge data needs such as those driven by cloud computing. We are also seeing the adoption of PCI Express in industrial and computing applications, as there are many other pieces of silicon with PCI Express interconnect in these systems. In 2009, we saw expanded PCI Express use on PC motherboards and in applications like high-end printing. This proliferation gave us record revenues from these products in Q4 2009 and we expect this expansion to continue throughout 2010. Photo courtesy Juniper Networks Photo courtesy ASUS Connectivity was the hardest hit during the downturn, as this product family addresses mostly smaller customers in the industrial segment that is supported by the distribution channel. While there has been no new development ongoing in this area we expect to reengage with new connectivity products in 2010. This will expand the available market we serve and give us further growth opportunities. Our top-20 customer base consists of the most dynamic companies in the electronics industry. This forces us to be better than your typical sub- $100M semiconductor company. We continue to offer leading-edge customer support while striving to achieve operational excellence. This was proven in 2009 with our continuous improvement of gross margin and significant reduction in operating expenses. We do what it takes to win; it is part of our core values. Photo courtesy Sun/Oracle Our mission is to solve the world’s connectivity challenges. Therefore, we do not shy away from our customers’ hard problems but instead add value in order to differentiate the company. In 2009, we developed our first 40nm process technology device. This is a major accomplishment, as this advanced node is only being used by very few companies in our industry. It shows the capability of the PLX team to drive leading-edge technologies in device architecture, as well as in system solutions. Innovation and differentiation are at the core of our values and are what set PLX apart. These are basic tenets that guide us well. Photo courtesy Cisco Systems, Inc. It is with a solid design pipeline and the belief that we do what it takes to win that will allow us to outpace the growth of the semiconductor industry in 2010. Our focus on customers and execution is unwavering. The team is very grateful for your support and belief in PLX. Your PLX Team Leader, Ralph Schmitt Silicon without Software is Just Sand
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an amount equal to that excess. The
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Revenues by product type were as fo
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SIGNATURES Pursuant to the requirem
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EXHIBIT INDEX Exh i bi t Number Des
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PLX Technology, Inc. 870 W. Maude A
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