Freescale Semiconductor Inc. Thursday (Oct. 20) reported third quarter sales in line with analysts' expectations while its chief executive described the current industry downturn as "normal" and not approaching the severity of the carnage of 2008 and 2009.    

Rich Beyer, Freescale's chairman and CEO, said the company's performance during the quarter was consistent with peers in the industry, many of which have described softening in business conditions and inventory reduction among customers. But, Beyer said, the current slowdown appears to be "a normal downturn" and not in his judgment anything approximating the steep industry downturn that began in 2008.

Beyer said he thinks the semiconductor industry is being impacted by two things. One, he said, is that the global macroeconomic environment started to show signs of weakening in the second quarter, creating caution among customers. The second situation, he said, is that following the earthquake and tsunami in Japan, when there was great concern over stability of supply, some customers began to "double book" orders from multiple suppliers to ensure a stable supply of products.

"I'd like to think the inventory issue is behind us," Beyer said, adding that visibility remains low.

Beyer noted that some independent analysts have predicted that the downturn will be relatively short and shallow. "I would say we don't have enough visibility, but I am hoping that they [the analysts] are right."

Also Thursday, John Daane, president and CEO of programmable logic supplier Altera Corp., said he sees some similarities between current business conditions—where customers are burning through inventories and deferring purchases—and the conditions leading up to the 2008-2009 downturn.

Freescale (Austin, Texas) reported third quarter sales of $1.14 billion, down about 6 percent from the previous quarter and down slightly from $1.15 billion in the year-ago quarter. The company reported a net loss of about $88 million for the quarter, narrowed from losses of $168 million and $156 million in the previous and year-ago quarters, respectively.

Freescale's third quarter sales were in line with consensus analysts' expectations, according to Yahoo Finance.
    
Freescale said its net sales of micronctrollers were $395 million in the third quarter, down 8 percent from the second quarter and down 6 percent from the year-ago quarter. RF, analog and sensor net sales were $306 million, down 3 percent from the previous quarter and up 13 percent from the year-ago quarter, the company said.

Freescale said its income before interest and taxes and depreciation and amortization (EBITDA) was $744 million for the third quarter and that its adjusted EBITDA for the last 12 months was $1.31 billion.

Freescale said it spend $48 million on capital expenditures during the quarter, or about 4 percent of sales.

Third quarter income was boosted by about $20 million from an insurance settlement over the company's fab in Sendai, Japan, which sustained major damage during the March earthquake and did not reopen. The company said it received another $16 million from the insurance settlement after the quarter closed.

For the fourth quarter, Freescale said it expects sales to decline to between $1 billion and $1.06 billion. The guidance fell short of what analysts had hoped for, which was about $1.1 billion, according to Yahoo Finance.

By: DocMemory
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