ON Semiconductor Plunges on Quarterly Earnings Miss

Shares in ON Semiconductor plunge after the company reports fiscal first-quarter earnings that miss forecasts amid 'challenging' market conditions.
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Shares of Chipmaker ON Semiconductor  (ON) - Get Report plunged on Monday after the company reported fiscal first-quarter earnings that missed analysts’ forecasts, and said that “challenging” market conditions mean it is accelerating its chipmaking timeline to bolster its long-term margins.

The Phoenix-based semiconductor maker, which focused in part of chips that spirit 5G technology, earned $124.3 million, or 30 cents an adjusted share, vs. $222 million, or 53 cents a share, in the comparable year-earlier quarter. Analysts polled by FactSet had been expecting earnings of 32 cents a share.

Revenue came in at $1.4 billion, matching analysts’ forecasts though slightly below the $1.5 billion it brought in a year ago.

“Our performance in 2019 validates the transforming nature of our business, as we expect to outperform most of our peer group against a backdrop of challenging macroeconomic and geopolitical conditions,” CEO Keith Jackson said in a statement.

“At the same time, “… we are taking substantial measures to expand our margins by making structural changes to our manufacturing footprint, and accelerating the timeline for production at our 300mm fab," Jackson said, adding that the company "... is well positioned to deliver strong near to mid-term performance.”

Based on product booking trends, backlog levels, and estimated turns levels, the company said it now expects fiscal first-quarter revenue of approximately $1.36 billion to $1.41 billion, and non-GAAP gross margin of between 33.7% and 34.7%.

The outlook for the first quarter of 2020 includes anticipated stock-based compensation expense of about $19 million to $21 million, the company said.

Separately, ON Semiconductor said it is exploring the sale of its automotive components manufacturing plant in Oudenaarde, Belgium. The plant supports its low-, medium- and high-voltage analog CMOS and BCD technologies.

Shares of ON Semiconductor were down 13.09%, or $3.03 a share, at $20.12 in morning trading on Monday.