Product category:
Power Supply ICs and Controllers
News Release from: Fairchild Semiconductor
Edited by the Electronicstalk Editorial
Team on 20 October 2006
Power demand drive Fairchild ahead
Fairchild Semiconductor has announced results for the third quarter ended 1st October 2006.
Fairchild Semiconductor has announced results for the third quarter ended 1st October 2006 Fairchild reported third quarter sales of $417.0 million, a 3% increase from the prior quarter and 21% more than the third quarter of 2005
This article was originally published on Electronicstalk on 28 Feb 2001 at 8.00am (UK)
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Fairchild reported third quarter net income of $25.1 million or $0.20 per diluted share compared with a net income of $23.0 million or $0.18 per diluted share in the prior quarter and a net loss of $20.8 million or $0.17 per share in the third quarter of 2005.
Gross margin was 30.7%, 10 basis points lower sequentially and 9.9 percentage points higher than in the third quarter of 2005.
Included in the third quarter 2006 results is $7.1 million in total equity based compensation in accordance with Statement of Financial Accounting Standards (SFAS) 123 Share Based Payment.
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Fairchild reported third quarter adjusted net income of $30.6 million or $0.25 per diluted share compared with adjusted net income of $28.8 million or $0.23 per diluted share in the prior quarter and an adjusted net loss of $3.0 million or $0.03 per share in the third quarter of 2005.
Adjusted net income (loss) excludes amortisation of acquisition-related intangibles, restructuring and impairments, net gain on the sale of the LED lamps and displays product line, gains from lawsuit settlements, recovery of equity investments, accelerated depreciation on assets to be abandoned and associated net tax benefits of these items and other acquisition-related intangibles.
Adjusted results include equity based compensation expense in 2006.
"We reported another solid quarter of sales growth paced by continued strong demand for our power products", said Mark Thompson, Fairchild's President and CEO.
"Our high and low power switches within the Functional Power Group as well as power conversion and analogue switch products in our analogue Products Group all reported 5% or greater sequential revenue growth for the quarter".
"Our analogue switch product line posted another record quarter for sales, up more than 45% from the year ago quarter".
"Sales were at or above the prior quarter levels for virtually all end markets with particular strength in products supporting the computing and consumer end markets", said Thompson.
"Order rates were seasonally slower in the summer months and then improved in late August and September".
"We continue to show steady gains in distribution resales", stated Thompson.
"Channel resales increased more than 3% sequentially in the third quarter and were 8% higher than a year ago".
"We tightly controlled our sales into the channel to track this increase in resales which resulted in a slight reduction in weeks of supply of our product at the distributors".
"Blended utilisation rates remained roughly at our target levels during the third quarter", stated Thompson.
"We continue to selectively add capacity to support growth and to maintain more stable lead times for higher margin analogue and functional power products".
"Lead times increased a few weeks by late summer, but we were able to manage them back down to the 10 to 12 week range by the end of the third quarter".
"Solid top line growth helped us to deliver more than a 6% sequential increase in adjusted net income", said Mark Frey, Fairchild's Executive Vice President and CFO.
"Gross margins were approximately flat to the prior quarter".
"R and D and SG and A expenses were also roughly in-line with our guidance".
"Our tax rate was 11% due to the recognition of a $2.4 million tax benefit for the revaluation of certain foreign tax assets and liabilities".
"Turning to the balance sheet, internal inventories increased slightly more than the level required to support our higher shipping rate, growing by about three days of inventory", stated Frey.
"Consequently, we have already adjusted our build plan to reduce internal inventories in the fourth quarter".
"Our strong sales growth and disciplined spending allowed us to generate $62 million in cash from operations, increasing our cash and marketable securities balance by $33 million to $556 million at the end of the third quarter".
"We anticipate that fourth quarter revenues will be flat to up 2% sequentially", said Frey.
"We expect gross margins to be 50 to 200 basis points lower sequentially as we work to reduce internal inventories, especially for our analogue products, during the fourth quarter to better position us for the first half of 2007".
"We begin the fourth quarter with slightly more backlog than a quarter ago and we forecast distribution resales to increase about 2% sequentially, which should enable us to grow revenues again this quarter".
"We expect R and D and SG and A spending, including equity based compensation, to remain at about 21.0 to 21.5% of sales for the fourth quarter".
"Equity based compensation expense is forecast to be between $6 to $7 million".
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