With the refi charge out of the way, it sounds like the operating profit is growing nicely year over year, and that the net profit margin should widen in the year ahead due to lower borrowing costs. All in all, a pretty nice quarter, I would think. And automotive sounds good.
So why are shares down $1 today to $15.34? Perhaps nervousness about the sluggishness of results in the industrial market?
Freescale is still burdened with their debt due to going private. I expect that they will continue to pay off the debt and eventually get above water. In the mean time, don't expect the finacial community to give them any credit.
Daleste: True, but that debt burden is now greatly reduced by refinancing to lower rates, and its automative efforts are starting to generate cash. If it can accelerate adoption of its designs in the industrial sector, this could turn into a powerful cash generator -- perhaps allowing some prepayment on that debt or freeing up the cash needed for further innovation. It may be a tricky balance -- hence the stock price nervousness -- but the company seems to be executing as well as can be expected. Or are you seeing something that I'm not?
Hello Tom. I agree totally with your statement. Freescale has been dominant in automotive for many years going back to the Motorola days. They should be able to continue profiting from that market. They have also been working to become a bigger player in industrial for many years. If they can keep their current market share and grow some it will help them to retire the debt.
Often when a company reports good news, its stock dips as investors who had anticipated the good news, take their cash off the table. This is characterized by the slogan: "Buy on the rumor, sell on the news." Then the stock typically regains strength a few days later. Not so here, at least, not yet. Freescale shares are now down to $15.17 in recent trading, falling further rather than rallying. I fear this is a case where investors don't think the company is making enough progress quickly enough. If the company succeeds in the industrial space, this price will look like a bargain in retrospect. But that's a big "if."
What do you think? Will Freescale's designs gain credence in the industrial sector as they are doing in automotive?
Bosch owns that market. TRW is another big firm. Even Conti is ahead of Fressscale. In MENS, Fresscale is losing ground to ST Microelectronics. I know they play but they do not have any dominant influence in this sector.
Motorola has been and (Freescale now) is still one of the leading company as chip suppliers for Automotive industry. And with Automotive industry going better over last quater/last year, I dont expect Freescale to go down. This debt reduction will definitely highlight their next quater profit but showing reduced interetsed as profit. Hope by then stock value goes up...