Freescale revenue outlook pushes shares higher as CEO talks cars

Reuters News
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Posted: Jan 27, 2015 7:26 PM

By Noel Randewich

SAN FRANCISCO (Reuters) - Freescale Semiconductor Ltd <FSL.N> gave a revenue forecast for the current quarter above Wall Street's expectations, and its shares rose 12 percent in extended trade as its chief executive pointed to growing demand from automobile makers for its chips.

The company, based in Austin, Texas, said in a statement on Tuesday that it expects net sales in the first quarter between $1.135 billion and $1.185 billion. Analysts, on average, are expecting net sales of $1.114 billion for the first quarter, which ends in March, according to Thomson Reuters I/B/E/S.

Freescale makes chips used in a broad range of markets, including consumer products, telecommunications infrastructure and industrial equipment, but nearly half of its revenue comes from the automobile industry.

Internet-connected cars with radar and other semi-autonomous driving features represent a third wave of electronics expansion in the automobile industry following the adoption of airbags and antilock brakes over a decade ago and the introduction of electronic fuel injection before then, CEO Gregg Lowe said on a conference call with analysts.

"We see car production looking fine for 2015. We also believe that content will continue to expand as well," Lowe said. "You've got a third wave happening and we're excited about content."

Freescale said quarter-over-quarter growth in sales of microcontrollers, analog chips and sensors would lead to a seasonally better-than-average increase in revenue in the March quarter.

"Any concerns about a prolonged downturn for these guys has been lifted," said Topeka Capital Markets analyst Suji De Silva. "They’re doing well in their microcontroller business. Base stations and wireless are also very good growth areas for them."

Earlier, the company posted fourth-quarter net sales of $1.10 billion, up 2 percent.

Net earnings for the fourth quarter were $63 million, or 20 cents a share, compared with a net loss of $118 million, or 46 cents a share, a year ago.

Freescale went public in 2011 after being taken private in 2006 for $17.6 billion in a leveraged buyout by a group of private equity firms that included Blackstone Group L, Carlyle Group and TPG Capital LP.

It reduced its long-term debt to $5.53 billion at the end of 2014 from $6.38 billion in 2013.

Freescale's stock jumped 11.95 percent in extended trade after closing up 0.65 percent at $26.35.

(Reporting by Noel Randewich)