ON Semiconductor ( ONNN ) reported
first-quarter 2013 earnings of 10 cents, beating the Zacks
Consensus Estimate by 2 cents or 25.0%.
ON Semi reported revenues of $661.0 million, down 2.8%
sequentially and 11.2% year over year.
Europe was the only region that grew in the last quarter.
ON Semi's revenues from Asia (including Japan) accounted for 69% of
the total revenue, while America generated 16% of the total revenue
and Europe contributed 15%.
Revenues by End Market
Automotive brought in 28% of the total revenue.
Segment revenues were up 4.7% on a sequential basis. ON Semi
witnessed growth in both North American and Chinese vehicle markets
and worldwide luxury light vehicle sales. Further, strong demand in
their in-vehicle networking products such as CAN and LIN
transceivers, body electronics, safety systems, infotainment and
power train fuelled the growth.
ON Semi has been winning designs in powertrain, body,
infotainment, power supplies and in-vehicle networking,
contribution from which should grow as the electronic content in
new vehicles continues to increase. ACISs, LED lighting, park
assist and start-stop, and new braking applications are seeing
Consumer generated 21% of the total revenue,
down 7.2% sequentially. Results in the last quarter were
benefited from the recovery of white goods sales in China. Rise in
adoption of SANYO inverter HIC solutions and intelligent power
modules are also a positive for the future.
Computing generated 18% of the total revenue,
down 7.9% sequentially. Management stated that the outperformance
versus the market (estimated decline 12-14%) was driven by share
gains and expressed optimism that share gains would increase
further when Intel's ( INTC ) Haswell
platform gained momentum in the second half of the year.
ON Semi continued its design wins in several areas such as hard
disk drives, gaming, desktop and server markets with its mixed
signal ASICs and MOSFETs.
another 20% of the total revenue, up 8.0% from the prior quarter.
Steady order flow and design wins drove the sequential growth.
Residential and commercial building improvements in the U.S. and
China are positives going forward.
Communications accounted for 13% of revenues,
down 15.8% from the prior quarter. Normal seasonality and platform
transition at an original equipment manufacturer (OEM) were the
main reasons for the weakness in the first quarter. However, new
design wins in upcoming smartphone models should drive solid
double-digit growth for ON Semi in the second quarter.
GAAP gross margin for the quarter was 30.9%, flat sequentially
and down 200 basis points (bps) from the year-ago quarter.
Excluding the impact of pension-related expenses, the non-GAAP
gross margin improved sequentially due to higher factory
utilization at ON legacy operations despite the revenue
Total operating expenses were $166.8 million, down 51.2%
sequentially and 17.3% year over year. The contraction from the
year-ago quarter was due to lower selling and marketing (S&M)
and general and administrative (G&A) expenses as a percentage
of sales. Increases in R&D expenses were the most
On a pro forma basis, ON Semi reported a net income of $44.7
million or a 6.8% net income margin, compared with $37.0 million or
5.4% in the previous quarter and $57.5 million or 7.7% in the
year-ago quarter. Our pro forma estimate for the last quarter
excludes restructuring, intangibles amortization and other charges
on a tax-adjusted basis but includes stock-based compensation. Our
calculations may differ from management's presentation due to the
inclusion/exclusion of some items that were not considered by
On a GAAP basis, the company recorded a net profit of $22.6
million or 5 cents per share compared to a loss of $138.2 million
(31 cents per share) in the previous quarter and an income of $28.2
million or 6 cents per share in the year-ago quarter.
Inventories were down 3.5% to $561.4 million with inventory
turns increasing from 3.2X to 3.3X in the first quarter. Days sales
outstanding (DSOs) were around 51, up from around 48 in the
The cash and short-term investments balance was $614.3 million
at quarter-end , with ON Semi generating $85.2 million from
operations, spending around $39.0 million on capex and $77.5
million to retire its 1.875% senior subordinated convertible
notes. At quarter-end, ON Semi had $706.8 million of
long-term debt on its balance sheet.
ON Semi expects second-quarter revenues in the range of
$675.0-$715.0 million. Both GAAP and non-GAAP gross margins are
expected in the 32.5%-34.5% range. Operating expenses on a GAAP
basis are expected to be $173.0-$183.0 million, while on a non-GAAP
basis they are expected to be $158.0-$168.0 million. Backlog levels
are estimated to be approximately 80.0%-85.0%. ON Semi also expects
other income/expense of around $15.0 million on GAAP basis.
Taxes are expected to be $2.0-$4.0 million on both GAAP basis
and non-GAAP basis, with the share count at 455.0 million.
ON Semi has a well-diversified business and an end-market focus
that would typically generate relatively steady revenues throughout
the year. The company also acquired additional capacity through the
SANYO acquisition that should come in handy once demand picks
The end-market demand trends indicate strengthening computing
and automotive markets, and steadier industrial and consumer
markets. Improvement in SANYO is dependent on recovery in demand
out of Asia markets, specially China and Japan and elimination of
ON Semi has a Zacks Rank #3 (Hold). Other semiconductor
companies such as Advanced Semiconductor Engineering
Inc. ( ASX
) and PLX Technology Inc. ( PLXT ) all have a
Zacks Rank #1 (Strong Buy).ADV SEMICON ADR (ASX): Free Stock Analysis
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