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Freescale (NYSE:FSL) is a big player in the semiconductor market. It has three operating segments which include transportation, networking and computing, and wireless and mobile. So, the company has a broad spread of both product and customers. Freescale was spun out of Motorola (NYSE:MOT) and, according to press accounts, there are concerns that the former parent may start buying chips from someone like Qualcomm (NASD:QCOM). Since cellular chips sales to Motorola are a big chunk of Freescale's sales, that would be a bad thing.

The company has good products. EE Times, one of the respected journals in the chip trade press, has recently given Freescale products and management high marks. The positive PR has not hurt the stock which has gone from a 52-week low of $15.97 to its recent level of $29. That means the company has added over $5 billion in market capitalization, roughly the equivalent of its entire 2005 revenue.

Freescale has done well, but has it done that well? Revenue from 2004 to 2005 went up from $5.715 billion to $5.843. Operating income more than doubled to $600 million. During 2005, quarterly income was fairly flat quarter-over-previous-quarter. However, operating income went up each Q and finished at $198 million in Q4.

The company does business with the right partners. It has recently announced an alliance with Nokia (NYSE:NOK) and Symbian to build the first 3G single core reference design and with STMicroelectronics (NYSE:STM) to build processors for automotive applications.

The company says that revenue for Q1 06 will be between $1.435 and $1.535 billion. It was $1.479 billion in Q4 05.

Freescale clearly has a good business, excellent products and an extremely strong balance sheet. With competition like Texas Instruments (NYSE:TXN) and the possibility that Motorola could turn to other suppliers, the run in the Freescale's stock does not seem justified.

NYSE FSL.B 1-yr Chart

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He has was also president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. and has been on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. McIntyre can be reached at douglasamcintyre@gmail.com.

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Source: Is Freescale Running Low On Fuel? (FSL)