SAN FRANCISCO—Fairchild Semiconductor posted a third-quarter net income of $2.7 million on revenue of $331.8 million, topping analyst expectations, the company reported Thursday (Oct. 15).
Fairchild (San Jose, Calif.) said revenue was up 19 percent compared to the second quarter, but down 23 percent compared to the third quarter of 2008.
The net income, which equates to 2 cents per diluted share, compares to a net loss of $24.9 million, or 20 cents per share, in the prior quarter and a net income of $26.7 million, or 21 cents per share, for the year-ago quarter, Fairchild said.
On a pro forma basis, excluding charges, Fairchild reported net income of $14.9 million, or 12 cents per diluted share for the third quarter. This compares to an adjusted net loss of $3.5 million, or 3 cents per share, in the prior quarter and adjusted net income of $34 million, or 27 cents per diluted share, in the third quarter of 2008.
Analysts had been expecting Fairchild to report third-quarter sales of about $316 million and a pro form net income of 6 cents per share, according to Yahoo Finance.
Third-quarter gross margin was 26 percent, Fairchild said, up from 23.2 percent in the prior quarter but down from 29.9 percent in the year-ago quarter.
Mark Thompson, Fairchild's president and CEO, said through a statement that the company executed well in the third quarter while making further progress on inventory reduction. The company's channel inventory is now at a record low 9.6 weeks, he said.
"Our channel inventories are at record low levels and we are committed to maintaining a very lean supply chain," Thompson said. "We plan to ship much closer to actual end market consumption rates in the fourth quarter and will adjust our shipments as required to keep channel inventories roughly flat to our current levels as we exit the year."
Mark Frey, Fairchild's chief financial officer, said the company believes sales of between $333 million and $343 million are possible for the fourth quarter.
Frey said Fairchild's scheduled backlog for fourth quarter shipments is currently about $333 million, roughly $33 million higher than at this point last quarter.
According to Craig Berger, an analyst with FBR Capital Markets, this suggests that fourth quarter revenues could surpass guidance if backlog ships as planned, even if "turns orders" decline somewhat late in the quarter.
"These facts, taken together, suggest management is indeed being conservative with its revenue outlook, a meaningful positive," Berger said in a report.
Berger maintained FBR's "outperform" rating on Fairchild's stock.
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