Pixelworks (PXLW) 10-Q 7 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Entity Information [Line Items]	'	'
Entity Registrant Name	'Pixelworks, Inc.	'
Entity Central Index Key	'0001040161	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q3	'
Amendment Flag	'false	'
Entity Common Stock, Shares Outstanding	'	23,144,320

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current assets:	'	'
Cash and cash equivalents	$19,315	$20,805
Accounts receivable, net	6,124	4,761
Inventories	2,428	1,663
Prepaid expenses and other current assets	1,126	2,858
Total current assets	28,993	30,087
Property and equipment, net	6,737	4,084
Other assets, net	1,673	2,573
Total assets	37,403	36,744
Current liabilities:	'	'
Accounts payable	3,202	1,327
Accrued liabilities and current portion of long-term liabilities	10,186	10,505
Current portion of income taxes payable	267	92
Short-term line of credit	3,000	3,000
Total current liabilities	16,655	14,924
Long-term liabilities, net of current portion	1,686	677
Income taxes payable, net of current portion	2,115	2,201
Total liabilities	20,456	17,802
Commitments and contingencies (Note 10)	'	'
Shareholders’ equity:	'	'
Preferred stock	0	0
Common stock	367,838	362,644
Accumulated other comprehensive loss	-82	-82
Accumulated deficit	-350,809	-343,620
Total shareholders’ equity	16,947	18,942
Total liabilities and shareholders’ equity	$37,403	$36,744

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended				9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Income Statement [Abstract]	'		'		'		'
Revenue, net	$17,111		$15,309		$45,818		$33,134
Cost of revenue (1)	8,545	[1]	5,987	[1]	21,596	[1]	15,213	[1]
Gross profit	8,566		9,322		24,222		17,921
Operating expenses:	'		'		'		'
Research and development (2)	6,634	[2]	4,234	[2]	18,906	[2]	16,128	[2]
Selling, general and administrative (3)	3,900	[3]	3,296	[3]	11,658	[3]	10,168	[3]
Total operating expenses	10,534		7,530		30,564		26,296
Income (loss) from operations	-1,968		1,792		-6,342		-8,375
Interest expense and other, net	-123		-101		-375		-296
Income (loss) before income taxes	-2,091		1,691		-6,717		-8,671
Provision for income taxes	209		182		472		149
Net income (loss)	($2,300)		$1,509		($7,189)		($8,820)
Net income (loss) per share, basic	($0.10)		$0.07		($0.32)		($0.46)
Net income (loss) per share, diluted	($0.10)		$0.07		($0.32)		($0.46)
Weighted average number of shares outstanding, basic	23,007	[4]	20,128	[4]	22,629	[4]	19,085	[4]
weighted average number of shares outstanding, diluted	23,007		21,290		22,629		19,085
[1]	Includes: Additional amortization of non-cancelable prepaid royalty 4 77 95 266 Stock-based compensation 61 29 191 100
[2]	Includes: Stock-based compensation 562 209 1,801 682
[3]	Includes: Stock-based compensation 634 301 1,909 1,041
[4]	The increase in shares from the third quarter of 2013 to the third quarter of 2014 and the first nine months of 2013 to the first nine months of 2014 is primarily due to the weighted average effect of the sale of approximately 3,025 shares of common stock in an underwritten registered offering during August 2013.

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Operations (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Cost of revenue	'	'	'	'
Additional amortization of non-cancelable prepaid royalty	$4	$77	$95	$266
Stock-based compensation	61	29	191	100
Research and development	'	'	'	'
Stock-based compensation	562	209	1,801	682
Selling, general and administrative	'	'	'	'
Stock-based compensation	$634	$301	$1,909	$1,041

Condensed_Consolidated_Stateme2

Condensed Consolidated Statements of Cash Flows (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:	'	'
Net loss	($7,189)	($8,820)
Adjustments to reconcile net loss to net cash provided by operating activities:	'	'
Stock-based compensation	3,901	1,823
Depreciation and amortization	3,415	3,242
Reversal of uncertain tax positions	-270	-452
Deferred income tax expense	160	0
Gain on asset disposal	0	-12
Other	35	54
Changes in operating assets and liabilities:	'	'
Accounts receivable, net	-1,363	1,302
Inventories	-765	433
Prepaid expenses and other current and long-term assets, net	2,065	833
Accounts payable	1,863	207
Accrued current and long-term liabilities	-438	2,990
Income taxes payable	360	213
Net cash provided by operating activities	1,774	1,813
Cash flows from investing activities:	'	'
Purchases of property and equipment	-2,597	-1,383
Purchases of other assets	0	-598
Proceeds from sales of property and equipment	0	13
Net cash used in investing activities	-2,597	-1,968
Cash flows from financing activities:	'	'
Payments on asset financings	-1,960	-1,753
Proceeds from issuances of common stock	1,293	356
Net proceeds from equity offering	0	9,625
Net cash provided by (used in) financing activities	-667	8,228
Net increase (decrease) in cash and cash equivalents	-1,490	8,073
Cash and cash equivalents, beginning of period	20,805	13,404
Cash and cash equivalents, end of period	$19,315	$21,477

Basis_of_Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Basis of Presentation	'
	BASIS OF PRESENTATION
	Nature of Business
	Pixelworks designs, develops and markets video and pixel processing semiconductors, intellectual property cores, software and custom ASIC solutions for high-quality digital video applications. Our products allow manufacturers and developers of digital display and projection devices to manufacture screens of all sizes that display the highest video quality with minimum power consumption. Our core video display processing technology intelligently processes video signals from a variety of sources and optimizes the image for the viewer. The continued advancement of display technology and rapid growth of video consumption on digital delivery systems and mobile applications has increased the demand for video display processing technology in recent years. Our products are used in a range of devices from large flat panel displays to small low power mobile applications. Our products are designed to reduce overall system power requirements and reduce costs for our customers by minimizing bandwidth. Our primary target markets include digital projection systems, digital televisions, UltrabookTM devices, tablets, and smartphones.
	We currently have an intellectual property portfolio of 128 patents related to the visual display of digital image data. Pixelworks was founded in 1997 and is incorporated under the laws of the state of Oregon.
	Condensed Consolidated Financial Statements
	The financial information included herein for the three and nine month periods ended September 30, 2014 and 2013 is prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and is unaudited. In our opinion, such information reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the Company's condensed consolidated financial statements for these interim periods. The financial information as of December 31, 2013 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2013, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2014, and should be read in conjunction with such consolidated financial statements.
	The results of operations for the three and nine month periods ended September 30, 2014 are not necessarily indicative of the results expected for the entire fiscal year ending December 31, 2014.
	Comprehensive Income (Loss)
	The Company reports comprehensive income (loss) and its components following guidance set forth by the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification section 220-10, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income or loss and its components in the financial statements. During the three and nine month periods ended September 30, 2014 and 2013, aside from our net income (loss), there were no other items of comprehensive income or loss and therefore the Company has not included a statement of comprehensive income (loss) in our interim condensed consolidated financial statements.
	Recent Accounting Pronouncements
	In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 allows for either full retrospective or modified retrospective adoption and will become effective for the Company on January 1, 2017. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial position, results of operations and cash flows.
	In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"), which will require an unrecognized tax benefit, or a portion of an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, unless an exception applies. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. The Company adopted ASU 2013-11 in the first quarter of 2014. The adoption of ASU 2013-11 did not have a material impact on the Company’s financial position, results of operations or cash flows as a result of this change.
	Use of Estimates
	The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Our significant estimates and judgments include those related to revenue recognition, product returns, warranty obligations, bad debts, inventories, property and equipment, impairment of long-lived assets, amortization of prepaid royalties, valuation of share-based payments, income taxes, litigation and other contingencies. The actual results experienced could differ materially from our estimates.

Balance_Sheet_Components

Balance Sheet Components	9 Months Ended
	Sep. 30, 2014
Balance Sheet Related Disclosures [Abstract]	'
Balance Sheet Components	'
	BALANCE SHEET COMPONENTS
	Accounts Receivable, Net
	Accounts receivable are recorded at invoiced amount and do not bear interest when recorded or accrue interest when past due. Accounts receivable are stated net of an allowance for doubtful accounts, which is maintained for estimated losses that may result from the inability of our customers to make required payments.
	Accounts receivable consists of the following:
		September 30,			December 31,
		2014			2013
	Accounts receivable, gross	$	6,460		$	5,076
	Less: allowance for doubtful accounts	(336		)	(315		)
	Accounts receivable, net	$	6,124		$	4,761
	The following is the change in our allowance for doubtful accounts:
		Nine Months Ended
		September 30,
		2014			2013
	Balance at beginning of period	$	315		$	352
	Additions charged (reductions credited)	21			(12		)
	Balance at end of period	$	336		$	340
	Inventories
	Inventories consist of finished goods and work-in-process, and are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market (net realizable value).
	Inventories consist of the following:
		September 30,			December 31,
		2014			2013
	Finished goods	$	1,240		$	793
	Work-in-process	1,188			870
	Inventories	$	2,428		$	1,663
	Property and Equipment, Net
	Property and equipment consists of the following:
		September 30,			December 31,
		2014			2013
	Gross carrying amount	$	27,050		$	21,733
	Less: accumulated depreciation and amortization	(20,313		)	(17,649		)
	Property and equipment, net	$	6,737		$	4,084
	Accrued Liabilities and Current Portion of Long-Term Liabilities
	Accrued liabilities and current portion of long-term liabilities consist of the following:
		September 30,			December 31,
		2014			2013
	Accrued payroll and related liabilities	$	2,862		$	2,261
	Current portion of accrued liabilities for asset financings	2,401			2,251
	Accrued commissions and royalties	2,090			1,862
	Accrued interest payable	1,354			1,087
	Reserve for warranty returns	199			329
	Deferred revenue	182			1,271
	Other	1,098			1,444
	Accrued liabilities and current portion of long-term liabilities	$	10,186		$	10,505
	The following is the change in our reserve for warranty returns:
		Nine Months Ended
		September 30,
		2014			2013
	Reserve for warranty returns:
	Balance at beginning of period	$	329		$	457
	Provision (benefit)	(104		)	108
	Charge-offs	(26		)	(204		)
	Balance at end of period	$	199		$	361
	Short-Term Line of Credit
	On December 21, 2010, we entered into a Loan and Security Agreement (the "Revolving Loan Agreement") with Silicon Valley Bank (the "Bank"). On December 14, 2012, we and the Bank entered into Amendment No. 1 to the Revolving Loan Agreement. The Revolving Loan Agreement, as amended, provides a secured working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $10,000, or (ii) $1,000 plus 80% of eligible domestic accounts receivable and certain foreign accounts receivable. On December 4, 2013, we and the Bank entered into Amendment No. 2 (the "Amendment No. 2") to the Revolving Loan Agreement which changes the maturity date of the revolving line of credit provided pursuant to the Revolving Loan Agreement to January 1, 2016. The maturity date was previously December 14, 2014, as provided by Amendment No. 1 to the Revolving Loan Agreement. In addition, the Revolving Loan Agreement, as amended, provides for non-formula advances of up to $10,000 which may be made solely during the last five business days of any fiscal month or quarter and which must be repaid by the Company on or before the fifth business day after the applicable fiscal month or quarter end. Due to their repayment terms, non-formula advances do not provide the Company with usable liquidity.
	The Revolving Loan Agreement, as amended, contains customary affirmative and negative covenants as well as customary events of default. The occurrence of an event of default could result in the acceleration of the Company's obligations under the Revolving Loan Agreement, as amended, and an increase to the applicable interest rate, and would permit the Bank to exercise remedies with respect to its security interest. As of September 30, 2014, we were in compliance with all of the terms of the Revolving Loan Agreement, as amended.
	Short-term borrowings outstanding under the Revolving Line consisted of non-formula advances of $3,000 as of September 30, 2014 and as of December 31, 2013, both advances were repaid within required terms. The weighted-average interest rate on short-term borrowings outstanding as of September 30, 2014 and December 31, 2013 was 3.5%.

Fair_Value_Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2014
Fair Value Disclosures [Abstract]	'
Fair Value Measurements	'
	FAIR VALUE MEASUREMENTS
	Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Three levels of inputs may be used to measure fair value:
	Level 1:	Valuations based on quoted prices in active markets for identical assets and liabilities.
	Level 2:	Valuations based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
	Level 3:	Valuations based on unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.
	The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of September 30, 2014 and December 31, 2013:
		Level 1		Level 2		Level 3		Total
	As of September 30, 2014:
	Money market funds	$	18,490	$	—	$	—	$	18,490
	As of December 31, 2013:
	Money market funds	$	20,396	$	—	$	—	$	20,396
	We primarily use the market approach to determine the fair value of our financial assets. The fair value of our current assets and liabilities, including accounts receivable and accounts payable approximates the carrying value due to the short-term nature of these balances. We have currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with U.S. GAAP.

Research_and_Development

Research and Development	9 Months Ended
	Sep. 30, 2014
Research and Development [Abstract]	'
Research and Development	'
	RESEARCH AND DEVELOPMENT
	During 2012, we entered into a best efforts co-development agreement (the “Co-development Agreement”) with a customer to defray a portion of the research and development expenses that would be incurred in connection with our development of an integrated circuit ("IC") product to be sold exclusively to the customer. Under the Co-development Agreement, we retain ownership of any modifications or improvements that are made to our pre-existing intellectual property and may use such improvements in products sold to other customers.
	At the completion of certain development milestones under the Co-development Agreement, we invoiced the customer and recognized offsets to research and development expense of $3,500 in each of 2012 and 2013. All milestones under the Co-development Agreement were completed as of December 31, 2013.

Income_Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2014
Income Tax Disclosure [Abstract]	'
Incomes Taxes	'
	INCOME TAXES
	The provision for income taxes during the 2014 and 2013 periods is primarily comprised of current and deferred tax expense in profitable cost-plus foreign jurisdictions, accruals for tax contingencies in foreign jurisdictions and benefits for the reversal of previously recorded foreign tax contingencies due to the expiration of the applicable statutes of limitation. We recorded a benefit for the reversal of previously recorded tax contingencies of $270 and $452 during the first nine months of 2014 and 2013, respectively.
	As we do not believe that it is more likely than not that we will realize a benefit from our U.S. net deferred tax assets, including our U.S. net operating losses, we continue to provide a full valuation allowance against essentially all of those assets, therefore, we do not incur significant U.S. income tax expense or benefit. We have not recorded a valuation allowance against our other foreign net deferred tax assets as we believe that it is more likely than not that we will realize a benefit from those assets.
	As of September 30, 2014 and December 31, 2013, the amount of our uncertain tax positions was a liability of $1,762 and $1,897, respectively. A number of years may elapse before an uncertain tax position is resolved by settlement or statute of limitation. Settlement of any particular position could require the use of cash. If the uncertain tax positions we have accrued for are sustained by the taxing authorities in our favor, the reduction of the liability will reduce our effective tax rate. We reasonably expect reductions in the liability for unrecognized tax benefits and interest and penalties of approximately $341 within the next twelve months due to the expiration of statutes of limitation in foreign jurisdictions. We recognize interest and penalties related to uncertain tax positions in income tax expense in our consolidated statements of operations.
	Our Chinese subsidiary was designated as an Advanced Technology Service Enterprise, allowing it to benefit from a Chinese tax holiday resulting in a reduction of its tax rate to 15%. The tax holiday expired on December 31, 2013, and therefore, our tax rate in China returned to 25% on January 1, 2014. We are currently making efforts to apply for an extension of the tax holiday. If an extension is granted, the impact of the extension of the tax holiday will be recognized in the quarter in which the extension has been approved by the tax authorities.
	The American Taxpayer Relief Act of 2012, which reinstated the United States federal research and development tax credit retroactively from January 1, 2012 through December 31, 2013, was not enacted into law until the first quarter of 2013. Therefore, the deferred tax asset resulting from such reinstatement for 2012 was reflected in 2013.  No additional credit has been reflected for 2014 as the credit has not been extended beyond December 31, 2013. If the credit is extended for 2014, we do not expect it to have a material impact on the financial statements.

Earnings_Per_Share

Earnings Per Share	9 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Earnings Per Share	'
	EARNINGS PER SHARE
	The following table sets forth the computation of basic and diluted net income (loss) per share:
		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2014				2013			2014			2013
	Net income (loss)	$	(2,300	)		$	1,509		$	(7,189	)	$	(8,820	)
	Basic weighted average shares outstanding 1	23,007				20,128			22,629			19,085
	Dilutive effect of employee equity incentive plans	—				1,162			—			—
	Diluted weighted average shares outstanding	23,007				21,290			22,629			19,085
	Net income (loss) per common share:
	Basic	$	(0.10	)		$	0.07		$	(0.32	)	$	(0.46	)
	Diluted	$	(0.10	)		$	0.07		$	(0.32	)	$	(0.46	)
	1	The increase in shares from the third quarter of 2013 to the third quarter of 2014 and the first nine months of 2013 to the first nine months of 2014 is primarily due to the weighted average effect of the sale of approximately 3,025 shares of common stock in an underwritten registered offering during August 2013.
	The following weighted average shares were excluded from the calculation of diluted net income (loss) per share as their effect would have been anti-dilutive:
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2014			2013			2014		2013
	Employee equity incentive plans	4,212			1,497			4,338		4,342
	Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the employee stock purchase plan.

Supplemental_Disclosure_of_Cas

Supplemental Disclosure of Cash Flow Information	9 Months Ended
	Sep. 30, 2014
Supplemental Cash Flow Information [Abstract]	'
Supplemental Disclosure of Cash Flow Information	'
	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Supplemental disclosure of cash flow information is as follows:
		Nine Months Ended
		September 30,
		2014		2013
	Cash paid during the period for:
	Interest	$	109	$	116
	Income taxes	187		350
	Non-cash investing and financing activities:
	Acquisitions of property and equipment and other assets under extended payment terms	$	3,067	$	1,266

Segment_Information

Segment Information	9 Months Ended
	Sep. 30, 2014
Segment Reporting [Abstract]	'
Segment Information	'
	SEGMENT INFORMATION
	We have identified a single operating segment: the design and development of ICs for use in electronic display devices. The majority of our assets are located in the United States.
	Geographic Information
	Revenue by geographic region, attributed to countries based on the domicile of the end customer, is as follows:
		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2014			2013				2014			2013
	Japan	$	11,604		$	4,461			$	25,678		$	14,047
	China	2,262			2,303				4,641			4,189
	Taiwan	1,866			1,949				6,819			5,475
	Europe	484			360				1,504			1,295
	Korea	388			895				2,759			1,703
	United States	163			4,905				3,354			5,143
	Other	344			436				1,063			1,282
		$	17,111		$	15,309			$	45,818		$	33,134
	Significant Customers
	The percentage of revenue attributable to our distributors, top five end customers, and individual distributors or end customers that represented 10% or more of revenue in at least one of the periods presented, is as follows:
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2014		2013			2014			2013
	Distributors:
	All distributors	60	%	53	%		66	%		67	%
	Distributor A	27	%	21	%		31	%		32	%
	Distributor B	13	%	11	%		9	%		11	%
	End customers: 1
	Top five end customers	74	%	65	%		56	%		56	%
	End customer A	32	%	2	%		16	%		4	%
	End customer B	13	%	7	%		12	%		12	%
	End customer C	12	%	11	%		8	%		9	%
	End customer D	9	%	10	%		13	%		13	%
	End customer E	—	%	32	%		5	%		15	%
	1	End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.
	The following accounts represented 10% or more of total accounts receivable in at least one of the periods presented:
		September 30,		December 31,
		2014		2013
	Account A	54	%	2	%
	Account B	15	%	11	%
	Account C	1	%	14	%
	Account D	0	%	45	%

Risks_and_Uncertainties

Risks and Uncertainties	9 Months Ended
	Sep. 30, 2014
Risks and Uncertainties [Abstract]	'
Risks and Uncertainties	'
	RISKS AND UNCERTAINTIES
	Concentration of Suppliers
	We do not own or operate a semiconductor fabrication facility and do not have the resources to manufacture our products internally. We rely on a limited number of foundries and assembly and test vendors to produce all of our wafers and for completion of finished products. We do not have any long-term agreements with any of these suppliers. In light of these dependencies, it is reasonably possible that failure to perform by one of these suppliers could have a severe impact on our results of operations. Additionally, the concentration of these vendors within Taiwan, the People’s Republic of China and Singapore increases our risk of supply disruption due to natural disasters, economic instability, political unrest or other regional disturbances.
	Risk of Technological Change
	The markets in which we compete, or seek to compete, are subject to rapid technological change, frequent new product introductions, changing customer requirements for new products and features, and evolving industry standards. The introduction of new technologies and the emergence of new industry standards could render our products less desirable or obsolete, which could harm our business.
	Concentrations of Credit Risk
	Financial instruments that potentially subject us to concentrations of credit risk consist of cash equivalents and accounts receivable. We limit our exposure to credit risk associated with cash equivalent balances by holding our funds in high quality, highly liquid money market accounts. We limit our exposure to credit risk associated with accounts receivable by carefully evaluating creditworthiness before offering terms to customers.

Commitments_and_Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies	'
	COMMITMENTS AND CONTINGENCIES
	Indemnifications
	Certain of our agreements include indemnification provisions for claims from third-parties relating to our intellectual property. It is not possible for us to predict the maximum potential amount of future payments or indemnification costs under these or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. We have not made any payments under these agreements in the past, and as of September 30, 2014, we have not incurred any material liabilities arising from these indemnification obligations. In the future, however, such obligations could materially impact our results of operations.
	Legal Proceedings
	We are subject to legal matters that arise from time to time in the ordinary course of our business. Although we currently believe that resolving such matters, individually or in the aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows, these matters are subject to inherent uncertainties and our view of these matters may change in the future.

Basis_of_Presentation_Policies

Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Recent Accounting Pronouncements	'
	Recent Accounting Pronouncements
	In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 allows for either full retrospective or modified retrospective adoption and will become effective for the Company on January 1, 2017. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial position, results of operations and cash flows.
	In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"), which will require an unrecognized tax benefit, or a portion of an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, unless an exception applies. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. The Company adopted ASU 2013-11 in the first quarter of 2014. The adoption of ASU 2013-11 did not have a material impact on the Company’s financial position, results of operations or cash flows as a result of this change.
Use of Estimates	'
	Use of Estimates
	The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Our significant estimates and judgments include those related to revenue recognition, product returns, warranty obligations, bad debts, inventories, property and equipment, impairment of long-lived assets, amortization of prepaid royalties, valuation of share-based payments, income taxes, litigation and other contingencies. The actual results experienced could differ materially from our estimates.
Receivables, Policy	'
	Accounts receivable are recorded at invoiced amount and do not bear interest when recorded or accrue interest when past due. Accounts receivable are stated net of an allowance for doubtful accounts, which is maintained for estimated losses that may result from the inability of our customers to make required payments.
Inventory, Policy	'
	Inventories consist of finished goods and work-in-process, and are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market (net realizable value).

Balance_Sheet_Components_Table

Balance Sheet Components (Tables)	9 Months Ended
	Sep. 30, 2014
Balance Sheet Related Disclosures [Abstract]	'
Accounts Receivable, Net	'
	Accounts receivable consists of the following:
		September 30,			December 31,
		2014			2013
	Accounts receivable, gross	$	6,460		$	5,076
	Less: allowance for doubtful accounts	(336		)	(315		)
	Accounts receivable, net	$	6,124		$	4,761
Allowance for Doubtful Accounts	'
	The following is the change in our allowance for doubtful accounts:
		Nine Months Ended
		September 30,
		2014			2013
	Balance at beginning of period	$	315		$	352
	Additions charged (reductions credited)	21			(12		)
	Balance at end of period	$	336		$	340
Inventories	'
	Inventories consist of the following:
		September 30,			December 31,
		2014			2013
	Finished goods	$	1,240		$	793
	Work-in-process	1,188			870
	Inventories	$	2,428		$	1,663
Property and Equipment, Net	'
	Property and equipment consists of the following:
		September 30,			December 31,
		2014			2013
	Gross carrying amount	$	27,050		$	21,733
	Less: accumulated depreciation and amortization	(20,313		)	(17,649		)
	Property and equipment, net	$	6,737		$	4,084
Accrued Liabilities and Current Portion of Long-Term Liabilities	'
	Accrued liabilities and current portion of long-term liabilities consist of the following:
		September 30,			December 31,
		2014			2013
	Accrued payroll and related liabilities	$	2,862		$	2,261
	Current portion of accrued liabilities for asset financings	2,401			2,251
	Accrued commissions and royalties	2,090			1,862
	Accrued interest payable	1,354			1,087
	Reserve for warranty returns	199			329
	Deferred revenue	182			1,271
	Other	1,098			1,444
	Accrued liabilities and current portion of long-term liabilities	$	10,186		$	10,505
Reserve for Warranty Returns	'
	The following is the change in our reserve for warranty returns:
		Nine Months Ended
		September 30,
		2014			2013
	Reserve for warranty returns:
	Balance at beginning of period	$	329		$	457
	Provision (benefit)	(104		)	108
	Charge-offs	(26		)	(204		)
	Balance at end of period	$	199		$	361

Fair_Value_Measurements_Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2014
Fair Value Disclosures [Abstract]	'
Schedule of Fair Value, Assets Measured on Recurring Basis	'
	The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of September 30, 2014 and December 31, 2013:
		Level 1		Level 2		Level 3		Total
	As of September 30, 2014:
	Money market funds	$	18,490	$	—	$	—	$	18,490
	As of December 31, 2013:
	Money market funds	$	20,396	$	—	$	—	$	20,396

Earnings_Per_Share_Tables

Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Earnings Per Share	'
	The following table sets forth the computation of basic and diluted net income (loss) per share:
		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2014				2013			2014			2013
	Net income (loss)	$	(2,300	)		$	1,509		$	(7,189	)	$	(8,820	)
	Basic weighted average shares outstanding 1	23,007				20,128			22,629			19,085
	Dilutive effect of employee equity incentive plans	—				1,162			—			—
	Diluted weighted average shares outstanding	23,007				21,290			22,629			19,085
	Net income (loss) per common share:
	Basic	$	(0.10	)		$	0.07		$	(0.32	)	$	(0.46	)
	Diluted	$	(0.10	)		$	0.07		$	(0.32	)	$	(0.46	)
	1	The increase in shares from the third quarter of 2013 to the third quarter of 2014 and the first nine months of 2013 to the first nine months of 2014 is primarily due to the weighted average effect of the sale of approximately 3,025 shares of common stock in an underwritten registered offering during August 2013.
Antidilutive Securities Excluded from Computation of Earnings Per Share	'
	The following weighted average shares were excluded from the calculation of diluted net income (loss) per share as their effect would have been anti-dilutive:
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2014			2013			2014		2013
	Employee equity incentive plans	4,212			1,497			4,338		4,342

Supplemental_Disclosure_of_Cas1

Supplemental Disclosure of Cash Flow Information (Tables)	9 Months Ended
	Sep. 30, 2014
Supplemental Cash Flow Information [Abstract]	'
Supplemental Cash Flow Information	'
	Supplemental disclosure of cash flow information is as follows:
		Nine Months Ended
		September 30,
		2014		2013
	Cash paid during the period for:
	Interest	$	109	$	116
	Income taxes	187		350
	Non-cash investing and financing activities:
	Acquisitions of property and equipment and other assets under extended payment terms	$	3,067	$	1,266

Segment_Information_Tables

Segment Information (Tables)	9 Months Ended
	Sep. 30, 2014
Segment Reporting [Abstract]	'
Schedule of Revenue by Geographic Region	'
	Revenue by geographic region, attributed to countries based on the domicile of the end customer, is as follows:
		Three Months Ended							Nine Months Ended
		September 30,							September 30,
		2014			2013				2014			2013
	Japan	$	11,604		$	4,461			$	25,678		$	14,047
	China	2,262			2,303				4,641			4,189
	Taiwan	1,866			1,949				6,819			5,475
	Europe	484			360				1,504			1,295
	Korea	388			895				2,759			1,703
	United States	163			4,905				3,354			5,143
	Other	344			436				1,063			1,282
		$	17,111		$	15,309			$	45,818		$	33,134
Schedule of Revenue from Significant Customers	'
	The percentage of revenue attributable to our distributors, top five end customers, and individual distributors or end customers that represented 10% or more of revenue in at least one of the periods presented, is as follows:
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2014		2013			2014			2013
	Distributors:
	All distributors	60	%	53	%		66	%		67	%
	Distributor A	27	%	21	%		31	%		32	%
	Distributor B	13	%	11	%		9	%		11	%
	End customers: 1
	Top five end customers	74	%	65	%		56	%		56	%
	End customer A	32	%	2	%		16	%		4	%
	End customer B	13	%	7	%		12	%		12	%
	End customer C	12	%	11	%		8	%		9	%
	End customer D	9	%	10	%		13	%		13	%
	End customer E	—	%	32	%		5	%		15	%
	1	End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.
Schedule of Accounts Receivable Percentage from Significant Customers	'
	The following accounts represented 10% or more of total accounts receivable in at least one of the periods presented:
		September 30,		December 31,
		2014		2013
	Account A	54	%	2	%
	Account B	15	%	11	%
	Account C	1	%	14	%
	Account D	0	%	45	%

Basis_of_Presentation_Details

Basis of Presentation (Details)	Sep. 30, 2014
	Patents
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Number of patents held	128

Balance_Sheet_Components_Accou

Balance Sheet Components (Accounts Receivable) (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
Accounts Receivable, Net [Abstract]	'	'	'	'
Accounts receivable, gross	$6,460	$5,076	'	'
Less: allowance for doubtful accounts	-336	-315	-340	-352
Accounts receivable, net	$6,124	$4,761	'	'

Balance_Sheet_Components_Allow

Balance Sheet Components (Allowance for Doubtful Accounts) (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Allowance for Doubtful Accounts Receivable [Roll Forward]	'	'
Balance at beginning of period	$315	$352
Additions charged (reductions credited)	21	-12
Balance at end of period	$336	$340

Balance_Sheet_Components_Inven

Balance Sheet Components (Inventories) (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Balance Sheet Related Disclosures [Abstract]	'	'
Finished goods	$1,240	$793
Work-in-process	1,188	870
Inventories	$2,428	$1,663

Balance_Sheet_Components_Prope

Balance Sheet Components (Property Plant and Equipment) (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Balance Sheet Related Disclosures [Abstract]	'	'
Gross carrying amount	$27,050	$21,733
Less: accumulated depreciation and amortization	-20,313	-17,649
Property and equipment, net	$6,737	$4,084

Balance_Sheet_Components_Accru

Balance Sheet Components (Accrued Liabilities and Current Portion of Long-Term Liabilities) (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
Balance Sheet Related Disclosures [Abstract]	'	'	'	'
Accrued payroll and related liabilities	$2,862	$2,261	'	'
Current portion of accrued liabilities for asset financings	2,401	2,251	'	'
Accrued commissions and royalties	2,090	1,862	'	'
Accrued interest payable	1,354	1,087	'	'
Reserve for warranty returns	199	329	361	457
Deferred revenue	182	1,271	'	'
Other	1,098	1,444	'	'
Accrued liabilities and current portion of long-term liabilities	$10,186	$10,505	'	'

Balance_Sheet_Components_Reser

Balance Sheet Components (Reserve for Warranty Returns) (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Movement in Standard Product Warranty Accrual [Roll Forward]	'	'
Balance at beginning of period	$329	$457
Provision (benefit)	-104	108
Charge-offs	-26	-204
Balance at end of period	$199	$361

Balance_Sheet_Components_Short

Balance Sheet Components (Short-Term Line of Credit) (Narrative) (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Balance Sheet Related Disclosures [Abstract]	'	'
Maximum borrowing capacity	$10,000	'
Line of credit facility, component of calculation for maximum borrowing amount under formula advances	1,000	'
Line of credit facility maximum borrowing capacity limited by eligible AR	80.00%	'
Line of credit facility, maximum borrowing capacity under non-formula advances	10,000	'
Line of credit facility, amount outstanding	$3,000	$3,000
Short-term debt, weighted average interest rate	3.50%	'

Fair_Value_Measurements_Detail

Fair Value Measurements (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Level 1	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis	'	'
Money market funds	$18,490	$20,396
Level 2	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis	'	'
Money market funds	0	0
Level 3	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis	'	'
Money market funds	0	0
Total	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis	'	'
Money market funds	$18,490	$20,396

Research_and_Development_Detai

Research and Development (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Research and Development [Abstract]	'
Research and development benefit recognized	$3,500

Income_Taxes_Details

Income Taxes (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Income Tax Disclosure [Abstract]	'	'	'
Reversal of uncertain tax positions	$270	$452	'
Liability for uncertain tax positions	1,762	'	1,897
Estimated decrease in total gross unrecogized tax benefits as a result of resolutions of global tax examinations and expiration of applicable statutes of limitations, including interest and penalties	$341	'	'
China, income tax holiday, reduced statutory rate	15.00%	'	'
China, statutory income tax rate In foreign country	25.00%	'	'

Earnings_Per_Share_Earnings_Pe

Earnings Per Share (Earnings Per Share) (Details) (USD $)	3 Months Ended				9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Earnings Per Share [Abstract]	'		'		'		'
Net income (loss)	($2,300)		$1,509		($7,189)		($8,820)
Basic weighted average shares outstanding 1	23,007	[1]	20,128	[1]	22,629	[1]	19,085	[1]
Dilutive effect of employee equity incentive plans	0		1,162		0		0
Diluted weighted average shares outstanding	23,007		21,290		22,629		19,085
Net income (loss) per common share, basic	($0.10)		$0.07		($0.32)		($0.46)
Net income (loss) per common share, diluted	($0.10)		$0.07		($0.32)		($0.46)
Stock issued during period under registered offering, shares	'		3,025		'		'
[1]	The increase in shares from the third quarter of 2013 to the third quarter of 2014 and the first nine months of 2013 to the first nine months of 2014 is primarily due to the weighted average effect of the sale of approximately 3,025 shares of common stock in an underwritten registered offering during August 2013.

Earnings_Per_Share_Antidilutiv

Earnings Per Share (Antidilutive Effect on Weighted Average Shares) (Details)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]	'	'	'	'
Employee equity incentive plans (in shares)	4,212	1,497	4,338	4,342

Supplemental_Disclosure_of_Cas2

Supplemental Disclosure of Cash Flow Information (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash paid during the period for:	'	'
Interest	$109	$116
Income taxes	187	350
Non-cash investing and financing activities:	'	'
Acquisitions of property and equipment and other assets under extended payment terms	$3,067	$1,266

Segment_Information_Geographic

Segment Information (Geographic Information) (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue, net	$17,111	$15,309	$45,818	$33,134
Japan	'	'	'	'
Revenue, net	11,604	4,461	25,678	14,047
China	'	'	'	'
Revenue, net	2,262	2,303	4,641	4,189
Taiwan	'	'	'	'
Revenue, net	1,866	1,949	6,819	5,475
Europe	'	'	'	'
Revenue, net	484	360	1,504	1,295
Korea	'	'	'	'
Revenue, net	388	895	2,759	1,703
United States	'	'	'	'
Revenue, net	163	4,905	3,354	5,143
Other	'	'	'	'
Revenue, net	$344	$436	$1,063	$1,282

Segment_Information_Major_Cust

Segment Information (Major Customers) (Narrative) (Details)	9 Months Ended
	Sep. 30, 2014
Segment Reporting Information	'
Number of customers included in five largest customer concentration disclosure	'5
Revenue, net | Minimum	'
Segment Reporting Information	'
Concentration risk benchmark percentage	10.00%
Accounts Receivable | Minimum	'
Segment Reporting Information	'
Concentration risk benchmark percentage	10.00%

Segment_Information_Revenue_by

Segment Information (Revenue by Major Customer) (Details) (Revenue, net)	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
All distributors	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	60.00%		53.00%		66.00%		67.00%
Distributor A	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	27.00%		21.00%		31.00%		32.00%
Distributor B	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	13.00%		11.00%		9.00%		11.00%
Top five end customers	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	74.00%	[1]	65.00%	[1]	56.00%	[1]	56.00%	[1]
End customer A	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	32.00%	[1]	2.00%	[1]	16.00%	[1]	4.00%	[1]
End customer B	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	13.00%	[1]	7.00%	[1]	12.00%	[1]	12.00%	[1]
End customer C	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	12.00%	[1]	11.00%	[1]	8.00%	[1]	9.00%	[1]
End customer D	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	9.00%	[1]	10.00%	[1]	13.00%	[1]	13.00%	[1]
End customer E	'		'		'		'
Revenue, Major Customer	'		'		'		'
Percentage of revenue	0.00%	[1]	32.00%	[1]	5.00%	[1]	15.00%	[1]
[1]	End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.

Segment_Information_Accounts_R

Segment Information (Accounts Receivable by Major Customer) (Details) (Accounts Receivable)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Account A	'	'
Segment Reporting Information	'	'
Percentage of accounts receivable	54.00%	2.00%
Account B	'	'
Segment Reporting Information	'	'
Percentage of accounts receivable	15.00%	11.00%
Account C	'	'
Segment Reporting Information	'	'
Percentage of accounts receivable	1.00%	14.00%
Account D	'	'
Segment Reporting Information	'	'
Percentage of accounts receivable	0.00%	45.00%