Fairchild Semiconductor - Ahead Of Q3 Results

(RTTNews) - Chipmaker Fairchild Semiconductor International Inc. (FCS) is on deck for third-quarter earnings this Thursday, October 15, before market opens. Analysts, surveyed by Thomson Reuters, are now estimating earnings of $0.20 per share on revenue of $344.63 million.

The company recently reduced its third-quarter sales outlook to about $340 million from the previously estimated range of $355 million - $375 million. Additionally, the company expects adjusted gross margin to be within the previous guidance range of 34.0% - 35.0%.

Operating expenses are now forecast to be $90 million - $92 million compared to the previous guidance of $95 million - $97 million.

Fairchild also initiated a program to structurally reduce operating expenses by about $30 million - $34 million annually, which is expected to be implemented by the middle of the fourth quarter of 2015. The company expects to incur about $13 million of severance expenses in the third quarter associated with the program.

"Given the incrementally weaker demand environment, we are taking decisive steps to reduce operating expenses to our target model of 25 percent of sales at the current revenue level," said Mark Thompson, Fairchild's CEO.

During the quarter, the company completed its manufacturing consolidation on schedule, which is expected to drive substantial cost savings. "These structural improvements in both manufacturing and operating costs give us greater confidence that we can achieve our target business model in 2016," Thompson added.

The company expects demand to increase in the third quarter, driven primarily by the mobile and wireless telecommunications markets. Fairchild said it is well positioned to benefit from higher unit production and greater product content at key mobile customers in the second half of 2015.

Fairchild Slipped To Loss In Q2

The company reported a second quarter net loss of $0.9 million or $0.01 per share compared to net income of $17.8 million or $0.14 per share in the second quarter of 2014.

Adjusted net income was $13.9 million or $0.12 per share, compared to $25.2 million or $0.20 per share in the second quarter of 2014. Analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude certain special items.

Total revenue for the quarter declined to $355.2 million from $371.6 million last year. Wall Street analysts had a consensus revenue estimate of $371.32 million for the quarter.

"We grew sales for our industrial, appliance and mobile products during the quarter and held our distribution channel inventory dollars flat sequentially," said Mark Thompson, Fairchild's chairman, president and CEO. "Demand was weaker than expected during the second quarter from some mobile and appliance customers, the wireless telecom sector as well as general market distribution."

About The Company

Fairchild Semiconductor specializes in the development and manufacturing of a complete portfolio of low- to high-power solutions for the mobile, industrial, cloud, automotive, lighting, and computing industries. Fairchild is one of the most reliable partners in the industry, offering the shortest time from concept to silicon, expert FAEs for customer support, and a flexible, multi-source supply chain.