Freescale's CEO sees light at end of the tunnel

SAN FRANCISCO—The downturn that has plagued the semiconductor industry since last summer may be nearing an end as customers burn off inventory, according to Rich Beyer, chairman and CEO of Freescale Semiconductor Inc.

Beyer—who's company reported a narrower net loss despite declining sales in the fourth quarter Thursday (Jan. 26)—said he expects the first quarter to be another down quarter for the industry, but that he is hopeful that the second quarter will bring a return to growth.

"We think we are getting close to the end," Beyer said. "Our indications are that this will be a down quarter—hopefully the final down quarter of this cycle."

Several chip companies, including Texas Instruments Inc., have said recently that they believe the industry has touched the bottom of the current down cycle. Some analysts, including Jim Feldhan of Semico Research Inc., have been predicting for months that the downturn would likely come to an end early this year as customers exhaust inventory stockpiles.

Freescale (Austin, Texas) reported fourth quarter sales of $1.01 billion, down 11 percent from the third quarter and down 14 percent from the fourth quarter of 2010. The company reported a narrower net loss, $6 million or 2 cents per share, compared to a net loss of $88 million in the third quarter and a loss of $102 million in the fourth quarter of 2010.

Sales for the quarter came in slightly below consensus analysts' expectations of $1.03 billion, according to Yahoo Finance.

Freescale's EBITDA—earnings before interest, taxes, depreciation and amortization—declined to $216 million in the fourth quarter, down 20 percent from the third quarter and down 23 percent compared to the fourth quarter of 2010.

For the full year 2011, Freescale reported sales of $4.57 billion, up 2 percent from 2010. The company reported a net loss for the year of $410 million, down from more than $1 billion in 2010.

Freescale said fourth quarter microcontroller sales amounted to $355 million, down 10 percent from the previous quarter and down 14 percent compared with the year ago quarter. The company reported $1.6 billion in microcontroller sales for the full year, roughly flat with 2010.

Despite the declining sales of microcontrollers, Beyer said Freescale does not believe it has lost market share. Sales are down chiefly because automakers stocked up on inventory following earthquake and tsunami in Japan last year and have been burning it off ever since, Beyer said. In industrials microcontrollers, distributors are also pushing down their inventory stockpiles, he said.

Freescale said sales of RF, analog and sensors slipped 5 percent sequentially to $292 million in the quarter, while sales of networking and multimedia chips declined 4 percent sequentially.

Beyer said Freescale is very pleased that the company is continuing to secure a significant number of design wins, which he hopes will pay dividends for the company in the future.

Freescale's CEO sees light at end of the tunnel

TAG:Rich Beyer Freescale Semiconductor Downturn