Chipmaker Fairchild Semiconductor ( FCS) swung to a second-quarter profit on the back of gross margin improvement and due to reserve for deferred tax asset created in 2005. The company earned $23 million, or 18 cents a share, in the quarter, compared with a loss of $205.3 million, or $1.71 a share, a year ago. Adjusted for items the company earned $28.8 million or 23 cents a share. Analysts polled by Thomson First Call were expecting earnings of 20 cents a share. Second-quarter revenue rose 17.4% to $406.3 million. Analysts polled by Thomson First Call were expecting $403.8 million. Gross profit margins rose 1090 basis points to 30.8% due to an increase in average daily sales rate by more than 6% sequentially in the second quarter. "We expect third quarter revenues to be roughly flat and gross margins to be flat to up 50 basis points sequentially," said the company. "We have more than 90% of our guided sales booked and scheduled to ship within the quarter so we're comfortable with our guidance for what is typically a seasonally slower quarter. Equity-based compensation expense is expected to be between $6 million to $7 million and we expect the effective tax rate to be about 15% in the third quarter." Shares fell $1.14 to $16.15.