Price cuts lead to revenue shortfall

ON Semiconductor advises that revenues for the second quarter of 2003 will decline by 3 to 5% compared with the first quarter of 2003.

During its 1st May 2003 conference call and in its first quarter earnings release, ON Semiconductor provided guidance that its second quarter 2003 revenues would be flat compared with the first quarter 2003 revenues.

The company's revenues for the first quarter of 2003 were $266.5 million.

Based on end-market weakness in the automotive and wireless markets, coupled with approximately 3% sequential average price declines in all of its markets, ON Semiconductor now expects that revenues for the second quarter of 2003 will decline by 3 to 5% compared with the first quarter of 2003.

However, as a result of previously announced cost-reduction actions, the company still projects that gross margins will improve by 100 to 200 basis points sequentially over the first quarter of 2003.

"Although disappointed by the top line weakness, I am encouraged that we have reduced our break-even revenue level through our cost-reduction efforts", said Keith Jackson, ON Semiconductor President and CEO.

"This will give us a better cost profile going forward".

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