Freescale Come Back? Stock Market Thinks So

The company says 50% margin 'in sight'

by Junko Yoshida - EETimes, Jan. 28, 2015 – 

MADISON, Wis. - Has Freescale Semiconductor, burdened by large debt repayments since it was bought by private equity funds in 2006, made its way out of the woods yet? The company still has the debt, but it has halted a decline in product revenue and it's deleveraging effectively.

Freescale is backing up its claim with fourth quarter gross margins at 47.2 percent, up 90 basis points from the previous quarter, while guiding the first quarter revenue of 2015 to be $1.16 billion, above a $1.11 billion consensus, and 5.2 percent sequential growth.

Partly, as the results of the company's earnings statement, Freescale stock price took a dramatic leap from 26.35 (previous close) to 31.16 at the close Wednesday (Jan. 28).

For the year, Freescale's net sales increased 11 percent and product group revenue grew 16 percent, which is "about two times the overall estimated semiconductor industry growth excluding memory and discrete," said Freescale CEO Gregg Lowe, during the company's financial call Tuesday (Jan. 27). "All five product groups' revenue grew nicely in 2014, and four of the five grew? double digits."

The standout performance in 2014 was RF chip sales, up 57 percent over 2013. MCU sales increased 15 percent, Digital Networking net sales expanded 13 percent compared with the prior year and Automotive MCUs grew 12 percent. Analog and Sensors net sales growth was eight percent.

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