Fairchild Semi Beats Estimates

The semi says first-quarter revenue could increase 5%-7% sequentially.
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Chipmaker

Fairchild Semiconductor

(FCS)

swung to a fourth-quarter loss but posted pro forma earnings that topped estimates.

The company reported a fourth-quarter loss of $4.7 million, or 4 cents a share, compared with net income of $15.8 million, or 13 cents a share, in the same quarter of 2004. Sales fell 2% from a year ago to $370.8 million.

On a pro-forma basis, earnings were 11 cents a share, compared to 21 cents a year ago. Analysts polled by Thomson First Call forecast earnings of 7 cents a share on revenue of $363.10 million.

"We expect first quarter revenues to increase 5%-7% sequentially due to our higher demand," said Mark Thompson, Fairchild's President and CEO. "We forecast gross margins to increase another 200-300 basis points sequentially. For the full year of 2006, we expect sales to grow at or above the market rate for our analog and power businesses while our standard products will be roughly flat to down a few percent compared to 2005. We remain committed to our gross margin improvement goals that have us reaching 30% in 2006 and mid-30% in 2007."

In the fourth quarter of 2005, Fairchild recorded $17.6 million of net proceeds from the previously announced settlement of a lawsuit against Sumitomo Bakelite, as well as an increase of $6.9 million in their reserve for related customer claims, resulting in a $10.7 million favorable net impact for the quarter. The firm's gross margin was 24.2%, down 140 basis points compared to a year ago.

The stock rose $1.79, or 10%, to $19.64 Thursday.

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