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© stevanovicigor dreamstime.com Business | October 20, 2015

Fairchild Semiconductor widens its loss in Q3

Fairchild Semiconductor reported third quarter sales of USD 342.1 million, down 4 percent from the prior quarter and 10 percent from the third quarter of 2014.
Fairchild reported a third quarter net loss of USD 8.2 million, compared to a net loss of USD 0.9 million in the prior quarter and a net loss of USD 1.0 million in the third quarter of 2014.

Gross margin was 33.6 percent compared to 30.9 percent in the prior quarter and 34.8 percent in the year-ago quarter. Included in the third quarter 2015 results were USD 27.7 million of restructuring and other expenses.

Adjusted net income was USD 23.3 million, compared USD 34.4 million in the third quarter of 2014.

“Demand was in line with our revised guidance during the third quarter reflecting weakness from Asia and especially China in the industrial, appliance and consumer markets. Sales for our automotive products were seasonally lower in the third quarter but are still on track for another year of solid growth,” said Mark Thompson, Fairchild’s chairman, president and CEO. “We completed the remaining factory closures during the third quarter to improve our manufacturing cost structure. Also during the quarter, we streamlined our leadership structure which we expect will reduce operating expenses by USD 30 to USD 34 million annually. We believe these actions will significantly improve earnings and cash flow even at these lower revenue levels.”

Forward Guidance

“We expect sales to be in the range of USD 320 to USD 335 million for the fourth quarter,” said Mark Frey, Fairchild’s executive vice president and CFO. “We expect adjusted gross margin to be 32.5 to 33.5 percent due primarily to lower factory utilization and sales partially offset by improved manufacturing costs. We anticipate R&D and SG&A spending to be USD 88 to USD 90 million due primarily to normal seasonality and the impact of the previously announced operating expense reduction program. The adjusted tax rate is forecast at 12 percent plus or minus 3 percentage points for the quarter.
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