Fairchild Semiconductor's (NYSE:FCS) shares rallied in pre-market trading on Thursday after the company reported that first quarter profits nearly doubled as sales improved due to increased capacity.
For the three months ending March 27, the San Jose, California-based company, which provides semiconductors for high performance power and mobile products, reported net income of $43.5 million, or $0.33 per diluted share, compared to $22.6 million, or $0.18 per share, in the year ago period.
Excluding amortization, restructuring and impairment costs, and other charges, the company posted profits of $51.3 million, or $0.39 per share. Revenue rose 9% to $413 million.
Analysts estimated first quarter earnings of $0.36 per share on sales of $413.25 million.
Gross margin increased to 36.8% - 440 basis points higher than a year earlier, as the company shifts capacity to its higher margin business.
"We got off to great start for 2011 by delivering strong sales growth and gross margin at the high end of expectations," said chairman, president and CEO, Mark Thompson.
The company's said its sales grew as a result of the capacity additions it made to support strong demand from industrial, automotive, appliance and alternative energy customers.
"Demand was generally in-line with expectations for all segments except the computing end market which was weaker due to Intel chipset delays.
"We saw a solid improvement in computing orders in March and expect good sales growth from this segment in Q2," added Thompson.
Indeed, looking ahead, the company said it expects sales in the range of $425 to $435 million - above analyst estimates of $423.61 million. Gross margin is also anticipated to increase to between 37 and 37.5%, due primarily to better product mix and higher factory utlization.