Product category:
Power Supply ICs and Controllers
News Release from: Fairchild Semiconductor
Edited by the Electronicstalk Editorial
Team on 19 January 2004
Investment pays off for Fairchild
Fairchild Semiconductor has published its results for the fourth quarter and full year ended 28th December 2003.
Fairchild Semiconductor has published its results for the fourth quarter and full year ended 28th December 2003 Fairchild reported fourth quarter sales of $369.2 million, 12% higher than the prior quarter and 4% greater than fourth quarter 2002
This article was originally published on Electronicstalk on 28 Feb 2001 at 8.00am (UK)
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Fairchild reported net income of $5.3 million or $0.04 per diluted share.
Included in the fourth quarter 2003 results are pre-tax charges of $6.0 million associated with the accounting for in-process research and development related to the purchase of Raytheon's nonmilitary RF components business completed in the quarter, as well as certain restructuring activities.
Operating margin for the fourth quarter was 4.9%, exceeding guidance and up 330 basis points sequentially.
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Fairchild reported a sequential increase in pro forma net income to $17.5 million or $0.14 per diluted share which exceeds the consensus estimate and compares favourably with pro forma net income of $5.5 million or $0.05 per diluted share in the previous quarter and $11.9 million or $0.10 per diluted share in the fourth quarter of 2002.
This is a 180% increase in pro forma EPS from the prior quarter and a 40% increase from a year ago.
Pro forma net income excludes amortisation of acquisition- related intangibles, restructuring and impairments, and other items.
Full year revenues for 2003 were $1395.8 million, compared with $1411.9 million in 2002.
Fairchild reported a net loss of $81.5 million or $0.69 per share in 2003, compared with a net loss of $2.5 million or $0.02 per share in 2002.
On a pro forma basis, the company reported net income of $31.3 million or $0.26 per diluted share, compared with $28.8 million or $0.26 per diluted share in 2002.
"I'm very excited about our performance in the fourth quarter", said Kirk Pond, Fairchild's President, CEO and Chairman of the Board.
"It was a breakout quarter in many ways".
"We grew revenue 12% sequentially and 4% from a year ago driven by our market leadership position in power products".
"Bookings were at the highest level in over three years".
"Our streamlined operations group did a tremendous job adjusting output to support this significant ramp in demand".
"We increased operating margins through solid management of our product mix enabled by our investment in leading edge supply chain management and business systems".
"I'm very proud of the efforts of all our employees in delivering exceptional operational and financial performance in the fourth quarter".
"Demand continued to be broad based and very strong throughout the fourth quarter", explained Pond.
"We booked orders at a consistently high level even during December".
"Total backlog grew more than 40% sequentially, led by strength in the computing, industrial, communications and consumer end markets".
"This high level of demand has driven our blended capacity utilisation to over 90% and increased our total backlog to the highest level in over three years".
"Average lead times are tracking in the 10 to 11 week range".
"Some of our product lines are at full capacity utilisation, and we are increasing both internal and external capacity as appropriate to support our customers".
"Distribution demand was particularly strong during the quarter, driving our sales into the channel to increase 15% sequentially", said Pond.
"We believe distributor resales have increased while inventories remained fairly level from the prior quarter, which has reduced supply on hand to approximately 11 weeks despite our higher sales into the channel".
"This level is down from the start of the fourth quarter and below our target of 13 weeks of supply on hand".
"Last quarter we discussed the broad based nature of our end market demand and highlighted that we would be closely watching the holiday sell through of the end markets that use our semiconductors", stated Pond.
"Based on the pace of bookings from our customers in the fourth quarter, especially the robust demand in December, the low cancellations we experienced during the fourth quarter, and the strength of our customers' end market sales during the holidays, it would appear that we had a very good sell through".
"This strength in end market demand, coupled with already low semiconductor supply chain inventory, provides a great start for 2004".
"Our investment in new products is really paying off as we enter this upturn", stated Pond.
"We've seen strong design activity in our latest generation mosfets, green mode power switches, power supply controllers for microprocessors and DDR memory, automobile ignition and consumer appliance IGBT products, Smart Power Modules and video filters".
"We're winning designs at many Asian PC manufacturers with our new VRM10 compliant power supply controllers", said Pond.
"These products, coupled with our latest power mosfets and drivers, deliver a complete high performance solution that is very cost effective".
"We're seeing tremendous interest in our new energy efficient, Green Mode power switches".
"We won designs at a number of customers for applications such as televisions, plasma display panels, DVD players and recorders, as well as a number of wins for battery chargers".
"Our latest low voltage power mosfets in leading edge packages are gaining designs at many notebook manufacturers, helping to drive a significant increase in backlog for this segment".
"We have a great pipeline of new products driving our dominance as the top supplier of power semiconductors".
"We've built a company focused on the power market, streamlined to deliver product at very competitive costs, well positioned in the fast growing Asian markets and committed to developing exciting new products", said Pond.
"In the fourth quarter we executed this strategy very well and delivered exceptional results".
"We enter 2004 with excellent backlog visibility and a great deal of momentum".
"I'm optimistic that we will continue to deliver significantly improved financial performance through the year".
"Fairchild executed well in the fourth quarter, exceeding our sales and operating margin guidance", said Matt Towse, Fairchild's Senior Vice President and Chief Financial Officer.
"Much of the increase in sales and operating margin was driven by better product mix, improved fixed cost leverage and lower costs".
"We generated $61.2 million in operating cash flow and increased our cash and marketable investments to $627.3 million".
"In the fourth quarter Fairchild demonstrated significant financial leverage through the strength of our business model".
"Given our improved backlog, we forecast first quarter revenues to increase 1 to 4% percent sequentially", said Towse.
"We have more than 90% of this amount already on backlog and scheduled for shipment in the first quarter".
"This is significantly better than what we would normally expect in the first quarter".
"We anticipate gross margin will be roughly 100 basis points higher sequentially due to the better product mix, lower costs and a more favourable pricing environment", said Towse.
"We continue to plan capital expenditures for the year at around 8 to 10% of sales, with a higher percentage in the first half, to accelerate the addition of capacity primarily to support demand for power discrete products".
"We forecast our tax rate for 2004 to be 25%".
"Looking beyond the first quarter, we believe that Fairchild will increase sales at or above the industry growth rate for our products", stated Towse.
"Our longer term target for gross margins continues to be in the mid-30% of sales".
"We would also expect to keep our R and D and SG and A spending as a percent of revenue in roughly the same range as the first quarter 2003 levels".
"We had a great fourth quarter and forecast an even better first quarter", concluded Towse.
"Fairchild is executing our strategy well, and I'm very confident about our potential in 2004".
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