Losses at S3 group narrow following investment drive


IRISH TECHNOLOGY firm Silicon Software Systems (S3) recorded a pretax net loss of €1.6 million in 2008, down from €5.3 million a year earlier, according to new accounts filed with the Companies Registration Office.

Founded in 1986, the company, which employs 140 people in Ireland and a further 145 overseas, saw turnover decline slightly from €24 million in 2007 to €23.5 million last year.

Operating losses narrowed from €2.7 million to €850,000 year-on-year, and the company had close to €2 million from operating activities.

S3 provides a range of integrated circuits and embedded software to other companies in the digital TV, telehealth and semiconductor sectors. Its clients include Intel, Samsung, Philips, Motorola, Nokia, Texas Instruments, Fujitsu and BSkyB.

Among the applications it develops is software that can help manufacturers of set-top boxes and pay-TV operators to quickly deploy HD offerings such as digital video recorders.

Chief executive John O’Brien told The Irish Times that since late 2006 the company had been in an aggressive investment mode, which led it to make significant investments in its semiconductor IP business and in mobile TV and set-top box testing products. It also announced its move into the telehealth sector during this period.

Formerly a subsidiary of the electronics firm Philips, chief executive John O’Brien led a management buyout of S3 in 2005. That same year the company raised €10 million in funding from ACT Venture Capital, which controls more than 50 per cent of voting rights in S3. Philips also retains a minority stake in the firm.

Last year the company concluded a €5 million funding deal with ETV Capital to enable it to continue to expand.

“In 2008 our core services businesses were quite profitable in 2008 [and] other investments continued, albeit at a slight lesser level than in 2007,” said Mr O’Brien.

“Administration costs were reduced by about €1 million over the year while professional fees and marketing expenditure were slashed, and we reduced our workforce by about 6 per cent and implemented pay cuts,” he added.

Mr O’Brien said S3’s TV technology business was resilient.

“There’s been a heavy demand for our TV technology in 2009. Where we’ve seen a dip is in our semiconductor division, because the sector has been in recession since the end of 2008 and has continued into this year, so we’ve seen our revenues decline there – but we believe the sector will return to growth in 2010,” he said.

Earlier this year, the company signed a deal with Microsoft covering set-top box testing services. Original equipment manufacturers will use the service to test products which use Microsoft’s Mediaroom IPTV software.

It also concluded major deals with Sky and Irdeto for its set-top box automated test and analysis system, known as StormTest.

“I expect our net profit position to improve again in 2009 over 2008,” said Mr O’Brien.