LONDON – Freescale Semiconductor Inc. reported a net loss of $65 million on sales revenue of $1.04 billion in the second quarter of 2013. However, the loss was due largely to a one-off financial restructuring cost that will reduce Freescale's interest burden by $30 million annually.
The majority of Freescale's five main products showed good growth in the second quarter, both sequentially and year-on-year, with microcontrollers and digital networking showing strong growth. Automotive MCUs and analog & sensors showed more modest growth. In a conference call to discuss the results with financial analysts, Freescale chief financial officer Alan Campbell described the quarter as having "a nice drumbeat of continued sequential improvement."
The loss was up sequentially from $48 million and nearly double the net loss of $34 million made in 2012's second quarter, but was affected by a $59 million charge for refinancing part of Freescale's debt. The operation income for the period was $125 million, compared to $104 million in 2013's first quarter, and $112 million in in the second quarter of 2012. The company's revenue was $1.04 billion, up 6 percent sequentially from $981 million, and up 1 percent from $1.03 billion in 2012's second quarter.
Freescale CEO Gregg Lowe told EE Times in a phone call, "The US automotive industry is doing well, as is the Chinese automotive sector, where we are well represented. European automotive has struggled but in quarter two it seems to have stabilized." Lowe added that although Freescale did not do extensive checks on inventory throughout the supply chain, at least a couple of indicators showed that within distribution and the automotive sector "inventory appears to be in check."
Freescale's guidance for the third quarter was for revenue to be between $1.05 billion and $1.09 billion. "If you look at the Freescale five and ten year average, quarter three is up sequentially 2 percent, and we are guiding up 3 percent."
Lowe said he was not fazed by the increased net loss. He said the company's strategy was to focus on revenue growth and margin expansion, and if that was done, profitability would follow.
The company's manufacturing utilization for the second quarter stood at 86 percent compared with 79 percent in the first quarter, Lowe said. He added that changes to streamline manufacturing flows would effectively allow Freescale to produce more from the same manufacturing footprint, effectively increasing capacity in the coming quarters.