Freescale turns $23 million profit in third quarter

Oct 25, 2013
Austin American Statesman

Despite signs of weakening sales in the global chip industry, Freescale Semiconductor Ltd. reported a strong third quarter on Thursday


The Austin-based company reported a profit of $23 million, or 9 cents a share, on sales of $1.09 billion, for the quarter. That compared with a loss of $24 million, or 10 cents a share, on sales of $1.01 billion for the same quarter a year ago


The company credited solid sales of chips to automakers, networking equipment makers and wireless network companies


Freescale reported its results after the close of trading Thursday. During the day, its stock gained 28 cents, or 1.7 percent, to close at $16.41 a share. But in after-hours trading, the stock price dropped $1.11, or 6.8 percent, to $15.30


Freescale CEO Gregg Lowe, who announced a major reorganization a year ago, said the company is making “solid progress” toward creating a business with expanding revenue and growing profit margin


The company, which continues to carry a heavy debt load from its 2006 leveraged buyout, also tracks its performance in earnings before interest expense, taxes and amortization. By that measure, its earnings for the quarter totaled $236 million, compared with $198 million at this time last year


The company said it expects net sales to be between $1.03 billion and $1.07 billion for the current quarter with profit margins remaining about the same as the third quarter


Sales by product group were: microcontrollers, $230 million, up from $192 million last year; digital networking, $238 million, up from $226 million; automotive microcontrollers, $270 million, up from $252 million; analog and sensor products, $181 million, compared with $180 million; wireless-related products, $89 million, up from $73 million; and other revenue, including intellectual property, $77 million, down from $86 million


The company says it continues to push forward on profit margins through a combination of expense controls, debt refinancing that saves interest expense, the introduction of new more profitable products and through a stronger sales effort, particularly in China, that is resulting in more new customers


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