Chip company releases first quarter results

A semiconductor company has announced total revenues in the first quarter of 2007 of $374.2 million, a decrease of approximately 7 % from the fourth quarter of 2006.

ON Semiconductor has announced first-quarter financial results for 2007 which showed that revenues were US $374.2 million, a decrease of approximately 7% from the fourth quarter of 2006.

Total revenues during the first quarter included approximately $347.8 million of product revenues and approximately $26.4 million of manufacturing services revenues.

During the first quarter of 2007, the company reported net income of $54.0 million, or $0.18 per share on a fully diluted basis.

First quarter 2007 results include approximately $3.3 million associated with stock based compensation expense.

During the fourth quarter of 2006, the company reported net income of $87.4 million, or $0.27 per share on a fully diluted basis.

Fourth quarter 2006 results included approximately $3.0 million associated with stock-based compensation expenses and a gain of $10.2 million, or $0.03 per fully diluted share, from a favourable insurance settlement and idle real property sales.

On a mix-adjusted basis, average selling prices in the first quarter of 2007 were down approximately 2% from the fourth quarter of 2006.

The company's gross margin in the first quarter was 36.5%, a decrease of approximately 280 basis points as compared with the fourth quarter of 2006, primarily due to lower capacity utilisation associated with manufacturing services and lower pricing, which we anticipated.

Gross margins for product revenue were 39.9% during the first quarter of 2007 compared with 42.1% during the fourth quarter of 2006.

Earnings before income tax, depreciation and amortisation (EBITDA) for the first quarter of 2007 were $83.6 million.

EBITDA for the fourth quarter of 2006 was $114.4 million and included the $10.2 million benefit from a favourable insurance settlement and idle real property sales.

"The first quarter of 2007 was a seasonally slower period for the semiconductor industry", says Keith Jackson, ON Semiconductor President and CEO.

"Our consumer driven end markets of computing, consumer electronics and wireless, in particular, experienced some headwinds as anticipated in the first quarter".

"Despite the weaker demand environment in the consumer driven end markets during the first quarter of 2007, I am excited about how our overall business performed with product revenues at over $347 million and product revenue gross margins at approximately 40%".

"We believe the inventory correction that has taken place in the industry over the past two quarters is largely behind us and as we look into the second half, we are beginning to see our backlog fill in nicely".

"We continue to expect a strong second half of 2007".

"Based upon product booking trends, backlog levels, anticipated manufacturing services revenue and estimated turns levels, we anticipate that total revenues will be approximately $375 to $385 million in the second quarter of 2007", Jackson says.

"We also anticipate that approximately $25 million of our total revenues will come from manufacturing services revenue".

"Backlog levels at the beginning of the second quarter of 2007 were down slightly from backlog levels at the beginning of the first quarter of 2007, but they still represent approximately 85% of our anticipated second quarter 2007 revenues".

"We expect that average selling prices for the second quarter of 2007 will be down approximately 1 to 2% sequentially".

"We expect our product gross margin in the second quarter to be approximately flat with the first quarter of 2007 and expect our manufacturing services gross margin to be similar to the first quarter of 2007".

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