October 15, 2009 / 6:41 PM / 9 years ago

WRAPUP 3-Cypress, Fairchild strong Q3 fails to cheer investor

* Cypress EPS $0.10 vs $0.06 est, ex items

* Fairchild EPS $0.12 vs $0.07 est, ex items

* Cypress, Fairchild sees Q4 rev above estimates

* Cypress shares fall as much as 6 pct, Fairchild 10 pct (Recasts; adds conference call details, updates share movement)

By Manasi Phadke

BANGALORE, Oct 15 (Reuters) - Chipmakers Cypress Semiconductor Inc CY.N and Fairchild Semiconductor International Inc FCS.N posted strong quarterly results, helped by improving demand, rising order rates and lower costs, but the numbers failed to impress investors.

Shares of both companies fell amid high expectations from investors, mostly triggered by Intel Corp’s (INTC.O) strong numbers earlier this week.

Cypress shares fell about 6 percent, while Fairchild slumped as much as 10 percent Thursday on the New York Stock Exchange. However, Cypress’ stock recouped some losses after the company issued a strong outlook.

“It’s basically because Intel set the bar pretty high,” ThinkEquity analyst Vijay Rakesh said. And some of the news was expected, he added.

On Tuesday, Intel’s quarterly outlook and third-quarter results beat market estimates, raising expectations for the rest of the technology sector. Altera Corp (ALTR.O) and Xilinx Inc (XLNX.O) followed with strong forecasts. [ID:nN1315624]

Merriman Curhan Ford analyst Bill Ong said investors, largely, have been expecting good news from chipmakers and it is probably priced into the stocks.

“I think it’s just more about the timing of the results, people are just more negative today,” Ong said. “It seems more sentiment driven.”

Shares of chipmakers such as Xilinx, Altera and Advanced Micro Devices AMD.N also fell, while the Philadelphia Semiconductor Index .SOXX was down as much as 2 percent at 327.75. Cypress and Fairchild forecast a strong fourth quarter ahead of the holiday season.

Cypress, which makes computer hardware like programmable clocks, memory and controllers, forecast fourth-quarter earnings of 10 cents to 11 cents a share, excluding items, on revenue of $180 million to $185 million. [ID:nWNAB9605]

Analysts expected the company to earn 9 cents a share, excluding items, on revenue of $179 million, according to Thomson Reuters I/B/E/S.

The chipmaker also expects a better-than-seasonal first quarter, a company executive said on a conference call with analysts. The company had posted a 16 percent fall in revenue on a sequential basis in the year-ago period.

Fairchild, which makes power-management and analog microchips, also forecast fourth-quarter revenue above Wall Street expectations.

The news underscores the recovery in the chip sector, that started gaining momentum in the second quarter.

Fairchild, whose competitors include Texas Instruments Inc TXN.N, On Semiconductor ONNN.O and National Semiconductor Corp (NSM.N), expects revenue of $333 million to $343 million, while analysts expected $329 million.


Fairchild returned to net profitability after three consecutive quarters of losses.

Though Cypress posted its fourth straight quarterly net loss, it returned to profitability on an adjusted basis.

Cypress has been garnering share in handsets with touch-screen technology, which seems to be a growth market for the company into 2010, Rakesh said.

Cypress earned 10 cents a share, excluding items, ahead of analysts’ expectations of 6 cents. [ID:nWNAB9417]

Excluding items, Fairchild earned 12 cents a share, while analysts were expecting 7 cents. [ID:nWNAB9390]

“Everything is positive, better pricing, better margins, inventory levels coming down, improved cash flow,” Ong said, referring to Fairchild’s results.

“Margins will continue to improve as visibility gets stronger.” (Editing by Ratul Ray Chaudhuri, Maju Samuel and Deepak Kannan)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below