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ON Semiconductor shares sunk 20% in pre-market trading Tuesday after the maker of power, data management and standard chips posted lower-than-expected earnings, and lowered its Q4 outlook. Adjusted third-quarter EPS were $0.21 on revenue of $403 million, down from $0.23/share on revenue of $421M a year ago. Analysts polled by Reuters expected EPS of $0.22 on revenue of $398.7M, on average. Total gross margin climbed 0.3% to to 38.6%. For the coming quarter, ON now expects revenue to be flat to up 2% sequentially, or $403M-$413M; analysts were looking for $417M. ON forecasts average selling prices in Q4 to drop about 2% sequentially, with flat gross margin growth. "As we enter the fourth quarter of 2007, we remain cautiously optimistic about the overall consumer demand environment for the upcoming holiday season," CEO Keith Jackson said. In a note last month, Wachovia Capital Markets told investors recent consolidation in the firm's shares is "an opportunity to get positioned ahead improved seasonal growth trends." Analysts cited growing desktop PC revenue and strong sales of gaming consoles as positive growth factors.

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Source: ON Sinks on Weak Earnings, Outlook