Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including “Risk Factors” and the financial statements, before you decide to buy our common stock. References to “we”, “us” and “our” refer to NetLogic Microsystems, Inc.NetLogic Microsystems, Inc.
We are a semiconductor company that designs, develops and markets high performance knowledge-based processors for a variety of advanced networking systems, such as routers, switches, access multiplexors and networked storage devices. Our knowledge-based processors use an advanced processor architecture and a large knowledge database containing network and network user information to make complex decisions about individual packets of information travelling through the network. Our knowledge-based processors significantly enhance the ability of networking original equipment manufacturers, or OEMs, to supply network service providers with systems offering more advanced functionality for the Internet, such as voice over Internet Protocol, or VoIP, virtual private networks, or VPNs, and streaming video and audio.
Our knowledge-based processors are designed into systems offered by leading networking OEMs, which we refer to as our OEM customers. Our OEM customers include Alcatel, ARRIS Group, Inc., Cisco Systems, Inc., Extreme Networks, Inc., Fujitsu Limited, Hitachi, Ltd., Huawei Technologies Co., Ltd., Juniper Networks, Inc., and Nortel Networks Corporation. We have developed close, collaborative relationships with our OEM customers, as well as the third party contract manufacturers used to manufacture their systems. Our revenue increased from $813,000 for the three months ended March 31, 2003 to $8.3 million for the three months ended March 31, 2004 due primarily to increased shipments of our knowledge-based processors.
Rapid growth of voice, video and data traffic, as well as the greater complexity created by the convergence of these types of traffic, increasingly challenges OEMs to offer systems that enable network service providers to introduce new services over the Internet, such as VoIP, VPNs, video on demand, streaming video and audio and music file downloading. In particular, networking systems must increasingly use knowledge about the overall network, which includes the method and manner in which these systems are interconnected, as well as traffic patterns and congestion points, connection availability, user-based privileges, priorities and other attributes. Using this knowledge to make complex decisions about individual packets of information is what we refer to as network-aware processing.
Several powerful trends are increasing demand for network-aware processing:
Networking OEMs face growing pressure to rapidly introduce new products, reduce their design and manufacturing costs and respond to the growing demand from network service providers for new and advanced services. These OEMs choose to focus on their core competencies in the design and development of certain functionalities within their networking systems, as well as systems-level design and integration. As a result, networking OEMs increasingly seek third party providers of advanced processing solutions that complement their core competencies to enable network awareness within their systems and meet their escalating performance requirements.
Our knowledge-based processors incorporate advanced technologies that enable rapid processing, such as a superscalar architecture, which uses parallel processing techniques, and deep pipelining, which segments processing tasks into smaller sub-tasks for higher decision throughput. These technologies enable networking systems to perform a broad range of network-aware processing functions, such as access control for network security, prioritization of traffic flow to maintain quality of service, or QoS, and statistical measurement of Internet traffic for transaction billing.
In order to meet the stringent demands on our knowledge-based processors for high speed, low power dissipation and small integrated circuit size, we use a highly customized design approach consisting of transistor-level circuit design and layout flows. By using this approach, we are able to implement processing elements that are defined at a fundamental transistor level, leading to higher levels of performance. Designing integrated circuits at the transistor level requires a comprehensive understanding of device physics to maximize device performance.
Our objectives are to be the leading provider of network-aware processing solutions to networking OEMs and to expand into new markets and applications. To achieve these goals, we are pursuing the following strategies:
We organized our business in 1995 as a California limited liability company and incorporated in Delaware in 2000. Our principal executive offices are located at 450 National Avenue, Mountain View, California 94043. Our telephone number is (650) 961-6676. Our web site is netlogicmicro.com. The information on our web site is not incorporated by reference into this prospectus.
The Offering
Unless otherwise indicated, the share information in this prospectus is as of March 31, 2004 and
Summary Financial Information
The following table sets forth summary financial data about our operating results and financial condition. You should read this information together with our financial statements and the notes to those statements and the information under “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus. The pro forma data in the table below reflect our capitalization as of March 31, 2004, with adjustments for the conversion of all shares of our preferred stock outstanding as of March 31, 2004 into 38,560,664 shares of common stock, which will occur automatically immediately prior to the closing of this offering, and the issuance of 577,984 shares of common stock issuable upon exercise of warrants outstanding as of March 31, 2004, with a weighted average exercise price of $1.60 per share, of which warrants to purchase 391,000 shares expire immediately prior to the closing of this offering. The pro forma as adjusted data in the table below reflect the application of the net proceeds from our sale of our common stock in this offering at an assumed public offering price of $ per share and after the deduction of the underwriting discount and estimated offering expenses.