Rumors of Fairchild acquisition
In the last part of this series, we saw that Intel’s (INTC) acquisition of Altera made Xilinx (XLNX) a potential acquisition target. Fairchild Semiconductor (FCS) is rumored to be another name on the list of consolidations happening in the semiconductor industry. According to a Bloomberg article dated October 14, 2015, Fairchild is believed to be in talks with ON Semiconductor (ONNN) and Infineon over a possible acquisition. Neither of the companies commented on the rumors.
After the news was leaked, Fairchild’s shares rose as much as 23.6% in the middle of the trading session. The news comes ahead of Fairchild’s 3Q15 earnings announcement on October 15, 2015.
Troubles with Fairchild
Fairchild’s revenue has been falling for the past five years, except in fiscal 2014 when it witnessed modest 2% growth YoY (year-over-year).
Analysts estimate that Fairchild will report revenue of $344.6 million in fiscal 3Q15. This is lower than its fiscal 2Q15 revenue of $355.2 million. Recently, the company reduced its fiscal 3Q15 sales outlook from the previous $355–$375 million to about $340 million. However, the company retained its adjusted gross margin forecast in the range of 34%–35%.
The company is expected to undertake a cost-cutting program to reduce its operating expenses by about $30–$34 million every year.
Fairchild was founded in 1957. It manufactures semiconductors used in energy, consumer electronics, cars, and cloud computing. The company reported revenue of $1.43 billion in fiscal 2014.
You can invest in Fairchild Semiconductor through the iShares Core S&P Mid-Cap ETF (IJH). It has 0.11% exposure in the company’s stock.