Wednesday, February 2, 2011

ON Semiconductor Corp. (NASDAQ: ONNN): Q4 Earnings Preview 2010

ON Semiconductor Corp. (NASDAQ: ONNN) is scheduled to release its fourth-quarter financial results before the market open on Thursday, February 3, 2011. Analysts, on average, expect the company to report earnings of 21 cents per share on revenue of $576.68 million. In the year ago quarter, the company reported earnings of 19 cents per share on revenue of $497.10 million.

ON Semiconductor Corporation, together with its subsidiaries, offers power, analog, digital signal processing, mixed signal, advanced logic, data management semiconductors, memory and standard semiconductor components, and integrated circuits.

In the preceding third quarter, the Phoenix, Arizona-based company's net income was $87.8 million or $0.20 per share uarter, up from $29.9 million or $0.07 per share in the prior year quarter. Excluding items, non-GAAP net income grew to $107.8 million or $0.25 per share from $57.4 million or $0.13 per share in the year-ago quarter. Revenues increased 27% to $600.7 million from $472.9 million in the same quarter last year.  Analysts, on average, expected the company to report earnings of $0.25 per share on revenue of $2.09 billion.

At its last earnings call in November, ON Semiconductor said that it expects fourth-quarter total revenues to be in the range of $565 million to $585 million, representing a sequential decline of 3-6%. The company expects average selling prices for the fourth quarter of 2010 to be approximately flat when compared to the third quarter of 2010.The GAAP gross margin is expected to be 40%–41%. Excluding special items of approximately $1 million, the non GAAP gross margin is expected to remain in the 40%–41% range.

Early in November, ON Semiconductor announced four new products to support portable and consumer electronics applications.

Recently, ON Semiconductor said that it agreed to acquire the CMOS Image Sensor Business Unit from Cypress in an all cash transaction for approximately $31.4 million. The transaction is expected to close by the end of the first quarter of 2011. Pursuant to the deal, ON Semiconductor is expected to acquire approximately 100 patents and patent applications related exclusively to the business and receive appropriate intellectual property licenses from Cypress Semiconductor in order to continue to conduct and grow the business. As part of the transaction, approximately 80 Cypress Semiconductor ISBU employees will join the ON Semiconductor organization. Further, upon the closing, ON Semiconductor may record one-time charges related to the transaction. The amounts of such charges, if any, have not yet been determined.

Tech stocks have continued to lead this market higher and semiconductors have been a big part of the reason for that move. In 2010, semiconductors brought in record revenue of $298.3 billion worldwide, a jump of 31.8 percent compared with the previous year, according to data recently from the Semiconductor Industry Association. In addition, chip sales in December hit $25.2 billion, a gain of 12.2 percent compared with 2009's final month. Fourth-quarter revenue grew the same percentage from the year-ago quarter to reach $75.5 billion. "Semiconductor sales are a bright spot in our current economic picture, delivering a record high in the billions," SIA President Brian Toohey said in a statement. "The year-over-year growth is due in part to the increased use of semiconductor technology in a wider range of electronic devices that we have come to enjoy in modern life. Our member companies continue to ramp up their operations to meet the growing demand for semiconductor innovation."

Full Disclosure: None.

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