Microsemi Corporation is an OEM of a broad range of
high-reliability and analog/mixed signal integrated circuits.
Fourth-quarter results exceeded the Zacks Consensus Estimate due to
higher volume which resulted in stronger revenues. Also, forward
revenue guidance was encouraging. The bulk of revenues comes from
stable end markets (defense, aerospace and medical equipment),
where Microsemi serves most of the largest players. Microsemi's
compelling products, scope for margin expansion and decent balance
sheet are other positives. However, macro-driven weakness and heavy
investment in R&D could impact near-term profitability. We
therefore reiterate our Neutral rating on the shares.
Irvine, California-based Microsemi Corporation (MSCC) offers a
broad range of semiconductor integrated circuit (IC) products,
broadly categorized into the high reliability and analog/mixed
The high reliability products are primarily targeted at
military, aerospace and medical markets. The analog/mixed signal
products are intended for backlighting in LCD TVs, monitors,
notebooks, PDAs and cell phones, as well as data storage devices,
wireless LAN, automotive, telecommunications, test instruments,
high-quality sound reproduction and data transfer equipment among
The company's products are focused on the light, sound and power
management areas of the semiconductor sector. Power management
semiconductors generally refer to a class of standard linear
integrated circuits ("SLICs") that perform voltage regulation and
referencing in most electronic systems. The scope of power
management has broadened in recent years to encompass other devices
and modules, including application specific standard products
("ASSPs ), which address particular aspects of power management,
such as audio or display-related ICs. Microsemi s portfolio is
composed of both a core platform of traditional SLICs, such as low
dropout regulators ("LDOs) and pulse width modulators ("PWMs ), as
well as differentiated ASSPs such as backlight inverters and small
computer standard interface ("SCSI") terminators. These products
manage, control and regulate power protect against transient
voltage spikes and transmit, receive and amplify signals.
Revenue distribution by end market in fiscal 2013 was as follows
Communications 29% (down 10.8% from 2011), Defense & Security
31% (up 6.9%), Aerospace 19% (down 11.9%) and Industrial 21% (up
At the end of 2013, the company operated ten domestic
fabrication facilities Garden Grove, La Mirada, Folsom, Camarillo,
San Jose and Santa Clara (California) Bend (Oregon) Phoenix
(Arizona) and Lawrence and Lowell (Massachusetts). International
manufacturing locations include Shanghai (China), Ennis (Ireland),
Manila (the Philippines) and Caldicot (the U.K.). Nearly 90% wafer
requirements and assembly and test requirements are sourced
The U.S. government was the end customer for approximately 31%
of 2013 net sales.
Around 53% of 2013 sales were generated in the U.S. (up 2.7%
from 2012), 15.0% came from Europe (down 14.2%) and the remaining
32% from Asia (down 8.7%).
The broad product lineup brings with it competition from a large
number of companies. The most significant competition comes from
Freescale Semiconductor, National Semiconductor, Texas Instruments,
Fairchild Semiconductor, Micrel, International Rectifier, Semtech,
Linear Technology, Maxim, Skyworks, Diodes, O2Micro and
Microsemi Corporation (MSCC): Read the Full
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