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Freescale’s Fiscal 3Q15 EPS Beat Analysts’ Estimates

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Freescale’s EPS beat analysts’ estimate

Freescale Semiconductors (FSL) is last company in this earnings series update. In the first four parts of the series, we saw that two technology companies, Corning (GLW) and Cypress (CY), failed to meet analysts’ estimates. They showed confidence in future growth prospects by announcing aggressive share buyback programs. Now, let’s see how Freescale performed before it completed its merger with NXP Semiconductors (NXPI).

On a YoY (year-over-year) basis, Freescale’s fiscal 3Q15 revenue fell 7.7% to $1.12 billion. It failed to meet analysts’ estimates of $1.15 billion. The firm’s EPS (earnings per share) rose from $0.49 in fiscal 3Q14 to $0.54 in fiscal 3Q15. It beat the consensus estimate of $0.49.

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Profitability

Freescale’s gross margin rose from 46.3% in fiscal 3Q14 to 48% in fiscal 3Q15. The operating earnings fell 13% YoY to $188 million due to the $35 million expense related to the merger. After adjusting for the merger expense, the operating earnings rose 2% YoY to $248 million. The adjusted net earnings fell 6% YoY to $171 million in fiscal 3Q15.

Cash position

The company generated $158 cash from operating activities in fiscal 3Q15. The company’s cash reserves fell from $737 million on October 3, 2014, to $552 million on October 2, 2015.

Fiscal 4Q15 guidance

Freescale posted weak guidance for fiscal 4Q15. It expects a seasonal fall in demand from the automotive and industrial space. It also expects continued softness in wireless infrastructure and enterprise spending to impact its results. The company expects to report a gross margin of 45%–46% on revenue of $950–$1 billion.

Analysts expect the company to post an EPS of $1.92 for fiscal 2015.

You can invest in Freescale through the Vanguard Extended Market ETF (VXF). It has 0.11% exposure in the company’s stock.

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