Weak sales to PC makers weigh on Fairchild Semi outlook

Reuters News
Posted: Jul 18, 2013 7:44 AM

(Reuters) - Chip maker Fairchild Semiconductor International Inc <FCS.N> forecast current-quarter sales well below analysts' estimates after reporting lower-than-expected second-quarter results due to weak demand from notebook PC and mobile device makers.

The company said it expects third-quarter revenue of $355 million to $370 million, compared with analysts' forecast of $388.2 million, according to Thomson Reuters I/B/E/S.

Inexpensive tablets have become the first computing device for many people, leading to a decline in PC sales and the collapse of the mini notebook market.

Fairchild, which supplies power-management chips to companies such as Apple Inc <AAPL.O> and Samsung Electronics Co Ltd <005930.KS>, said gross margin in the second quarter fell to 29.1 percent from 32.6 percent a year earlier.

Adjusted gross margin was down 2.8 percent at 29.8 percent. The company expects adjusted gross margin of about 31.5 to 33.0 percent in the third quarter due to higher factory utilization and better product mix.

"Mobile sales are expected to increase in the third quarter due largely to one major customer and continued growth from our Chinese customers," Chief Executive Mark Thompson said.

Longbow Research analyst Shawn Harrison said the customer could be Apple, which is expected to launch a new version of its iPhone later this year.

The chip maker reported net loss of $7.5 million, or 6 cents per share, for the second quarter, compared with a profit of $11.9 million, or 9 cents per share, a year earlier.

Excluding items, the company posted a profit of 1 cent per share, below analysts' estimate of 8 cents per share.

Revenue fell 1.4 percent to $356.5 million, below Wall Street expectation of $365.7 million.

Fairchild shares closed at $14.32 on Wednesday on the New York Stock Exchange.

(Reporting By Lehar Maan, Supantha Mukherjee and Chandni Doulatramani in Bangalore; Editing by Kirti Pandey)