Seeking Alpha

Freescale Semiconductor Inc. (FSL)

  • Tue, Sep. 8, 3:25 PM
    • The Philadelphia Semi Index (SOXX +3.9%) has risen to its highest levels since mid-August on a day the Nasdaq is posting a 2.3% gain.
    • Likely helping out: Microchip (MCHP +8.4%), still often seen as an industry bellwether (though its commentary accompanying last fall's warning sparked criticism), has adjusted its FQ2 (calendar Q3) revenue and EPS guidance to $545M-$563M ($554M midpoint) and $0.60-$0.66 from a prior $$532M-$569M ($550.5M midpoint) and $0.58-$0.66. The outlook comes after many chipmakers (Microchip included) offered below-consensus calendar Q3 guidance amid an inventory correction, weak PC demand, and slowing Chinese smartphone growth.
    • Microchip's core ops are said to be tracking in-line with prior expectations, and recently-acquired Micrel's above expectations. The 8.6M shares issued in the Micrel deal have been repurchased.
    • Also: Various Taiwanese chipmakers and supply chain firms have reported August sales. Chip packaging/testing firms ASE (ASX +5.9%) and Siliconware (SPIL +4.1%) respectively reported sales were up 5.8% and 5.7% M/M, and up 9.5% and down 4.2% Y/Y.
    • Big gainers include Microchip peers NXP (NXPI +6.8%), Freescale (FSL +5.8%), Silicon Labs (SLAB +4.4%), and Cypress (CY +4.4%). Others include Avago (AVGO +5.8%), Xilinx (XLNX +5.7%), Cavium (CAVM +5.5%), Analog Devices (ADI +6.3%), Synaptics (SYNA +5.4%), Linear (LLTC +4.6%), Cirrus Logic (CRUS +4.7%), IDT (IDTI +4.6%), Sigma Designs (SIGM +4.9%), and chip equipment maker Axcelis (ACLS +8%).
    • SanDisk, ON Semi, and Silicon Motion are benefiting from upgrades/bullish coverage. Apple holds its iPhone event at 1PM ET tomorrow.
    | Tue, Sep. 8, 3:25 PM | 1 Comment
  • Tue, Aug. 4, 2:33 PM
    • Apple is down 2.6% on strong volume (adding to recent post-earnings declines), and a slew of iPhone/iPad chip suppliers are also seeing major losses today. The Nasdaq is down just 0.3%, while the Philadelphia Semi Index is down 1.5%.
    • RF chipmakers Skyworks (SWKS -5.4%), Qorvo (QRVO -3.8%), and Avago (AVGO -3%) are among the decliners, as are audio codec supplier Cirrus Logic (CRUS -5.5%), motion sensor supplier InvenSense (INVN -5.7%), NFC/motion co-processor supplier NXP (NXPI -3.3%), and LCD driver supplier Synaptics (SYNA -3.8%). The selloff has occurred in the absence of major news
    • NXP merger partner Freescale (FSL -2.8%) is also off, as is chip packaging/testing firm Amkor (AMKR -4.2%), which has strong iPhone exposure. Earlier today, the EC announced NXP has offered concessions to win regulatory approval for the Freescale deal, which has a review deadline of Sep. 4. NXP has already agreed to sell its base station power amplifier unit for $1.8B to appease regulators.
    • InvenSense reports after the close. The other aforementioned names have already posted their calendar Q2 results.
    | Tue, Aug. 4, 2:33 PM | 48 Comments
  • Thu, Jul. 30, 1:40 PM
    • With many other chipmakers (including microcontroller rivals such as TI and Atmel) having already provided soft Q3 outlooks, NXP (NASDAQ:NXPI) is rallying in spite of providing light Q3 revenue guidance with its Q2 EPS beat and in-line sales. Merger partner Freescale (NYSE:FSL) is naturally along for the ride.
    • Cost controls helped NXP beat Q2 EPS estimates: GAAP operating expenses fell 1% Y/Y to $393M - R&D totaled $195M and SG&A $198M. Also: $162M was spent on buybacks, and gross margin (non-GAAP) rose 20 bps Q/Q and 10 bps Y/Y to 48.7% (above guidance of 48.5%). Q3 GM guidance is at 48.5%-49%.
    • iPhone NFC chip sales fueled a 39% Y/Y increase in Secure Connected Devices revenue to $276M. Apple M8 motion co-processor sales drove a 29% increase in secure interfaces/power revenue to $303M. Secure ID solutions (smart cards/EMV) revenue fell 4% to $257M, automotive rose 8% to $310M, and standard products (power management and logic ICs) rose 2% to $322M.
    • Q2 results/Q3 guidance, PR
    | Thu, Jul. 30, 1:40 PM | 3 Comments
  • Wed, Jul. 22, 11:11 AM
    • The Philadelphia Semi Index (SOXX -3.2%) has fallen to its lowest levels since February after Apple, ARM, and Linear Technology posted their calendar Q2 reports yesterday afternoon.
    • Apple (down 4.8%) beat estimates, but offered soft guidance and reported slightly below-consensus iPhone sales. ARM (down 3.8%) reported roughly in-line Q2 results and a 26% Y/Y increase in ARM-based chip shipments, while stating it expects 2015 results to be in-line with expectations.
    • Linear (down 7.8%) missed FQ4 estimates and provided weak FQ1 guidance. Notably, the analog/mixed-signal chipmaker added it saw bookings slow "considerably" towards the end of Q2, with industrial and PC demand particularly weak. Bookings have improved in July, but Linear is still "preparing for a difficult [Q3]." The company expresses optimism the downturn will be short.
    • Apple suppliers are seeing big losses (previous). As are Linear peers Texas Instruments (TXN -3.7%), ON Semi (ON -5.1%), Maxim (MXIM -3.5%), IDT (IDTI -6.5%, Apple Watch supplier), InPhi (IPHI -4%), Exar (EXAR -4.2%), and Analog Devices (downgraded by Drexel Hamilton).
    • Other decliners include Micron (MU -4.2%, also an Apple supplier), Synaptics (SYNA -6.4%, ditto), STMicroelectronics (STM -6.2%, downgraded by Citi), Freescale (FSL -4.8%, following merger partner/Apple supplier NXP lower), Microchip (MCHP -4.6%), Cypress (CY -4.3%), Lattice (LSCC -3.9%), and Silicon Motion (SIMO -4.4%).
    • Qualcomm, TI, Cirrus Logic, SanDisk, and Xilinx report this afternoon.
    | Wed, Jul. 22, 11:11 AM | 3 Comments
  • Wed, Jul. 8, 11:37 AM
    • Chip stocks are underperforming as the Nasdaq registers a 1.2% decline. The Philadelphia Semi Index (SOXX -2.6%) is now down 13% from a June 1 peak of $101.80, and 4% YTD; it's still up 87% from a Nov. 2012 low of $47.58.
    • Plunging Chinese equity markets could be weighing on the group. With retail Chinese investors having set up brokerage accounts en masse over the last year, there are plenty of concerns about the reverse wealth effect of a crash. The Economist reccently downplayed those worries, noting a relatively modest 15% of Chinese household assets are invested in stocks.
    • Major decliners among chip developers include Skyworks (SWKS -4.9%), Qorvo (QRVO -5.6%), InvenSense (INVN -5.6%), NXP (NXPI -4.7%), Freescale (FSL -4%), MoSys (MOSY -9.4%), AppliedMicro (AMCC -5.1%), Cavium (CAVM -3.8%), and Silicon Motion (SIMO -6.4%). SIMO also fell yesterday after favorably adjusting its Q2 sales guidance. Skyworks and Qorvo sold off yesterday morning before rebounding in afternoon trading.
    • Other names tied to the industry that are seeing heavy selling pressure include ARM (ARMH -4%), TowerJazz (TSEM -5.1%), UMC (UMC -4.4%), Veeco (VECO -4.3%), and Axcelis (ACLS -4.6%).
    | Wed, Jul. 8, 11:37 AM | 6 Comments
  • Fri, May 1, 12:34 PM
    • After giving back most of yesterday's initial post-earnings gains amid a market selloff, NXP (NXPI +4.3%) is up sharply today as upbeat sell-side reactions arrive. Merger partner Freescale (FSL +3.7%) is naturally following NXP higher.
    • Needham's Rajvindra Gill observes that while NXP offered soft Q2 guidance (as many expected), it guided on its CC (transcript) for full-year revenue of $6.2B-$6.3B, roughly in-line with consensus and good for 11% Y/Y growth at the midpoint. He adds Q1 gross margin of 48.5% was above a 47.8% consensus, and that Q2 GM guidance of 48.5% was 40 bps above consensus.
    • Gill, who launched coverage on NXP with a Strong Buy rating and $140 target in March, still sees NXP/Freescale delivering $9+ in 2017 EPS, and asserts the post-merger company will be "a powerhouse in autos, microcontrollers (MCUs), and the Internet-of-Things (IoT)."
    • Separately, an ABI Research teardown of the Apple Watch's S1 chip module turned up (as expected) an NXP NFC controller IC, as well as a second NXP chip (motion co-processor?). AMS provides a complementary NFC signal booster chip.
    | Fri, May 1, 12:34 PM | Comment!
  • Thu, Apr. 30, 9:40 AM
    • In addition to slightly missing Q1 revenue estimates (while beating on EPS), NXP (NASDAQ:NXPI) is guiding for Q2 revenue of $1.485B-$1.535B and EPS of $1.33-$1.43, mostly below a consensus of $1.54B and $1.41. However, a soft outlook was expected after many peers provided one last week.
    • With Apple NFC chip and M8 motion co-processor demand still providing a boost, high-performance mixed-signal chip sales (75% of total revenue) rose 21% Y/Y in Q1 to $1.1B. Standard products (analog/power management chips) rose 9% to $323M.
    • Boosting Q1 EPS, gross margin (non-GAAP) was 48.5%, +190 bps Q/Q and -100 bps Y/Y, and slightly above guidance of 48%; Q2 GM guidance is at 48.5%. Also: GAAP operating expenses only rose 2% Y/Y to $409M; R&D spend rose by $10M to $199M, but SG&A fell by $3M to $210M.
    • Merger partner Freescale (NYSE:FSL) is following NXP higher. Freescale posted a Q1 beat and soft guidance last week.
    • Q1 results, PR
    | Thu, Apr. 30, 9:40 AM | Comment!
  • Fri, Apr. 24, 2:03 PM
    • Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
    • NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
    • Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
    • As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
    • Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
    • Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
    | Fri, Apr. 24, 2:03 PM | 1 Comment
  • Thu, Apr. 23, 6:25 PM
    • Though it beat Q1 estimates, Freescale (NYSE:FSL) has guided for Q2 revenue of $1.155B-$1.205B, below a $1.22B consensus.
    • No explanation is given for the outlook in the earnings release. Texas Instruments and Xilinx have both observed seeing soft demand from the mobile infrastructure market, which Freescale is well-exposed to. Freescale's RF sales (inc. mobile power amplifiers) rose 63% Y/Y in Q1 to $184M.
    • Shares have fallen to $38.99 AH; they were down 3.7% in regular trading thanks to TI/Xilinx's numbers. NXP, which is set to buy Freescale in a cash/stock deal, is nearly unchanged for now.
    • Q1 results, PR
    | Thu, Apr. 23, 6:25 PM | 1 Comment
  • Thu, Apr. 23, 12:20 PM
    • While the Nasdaq is up 0.3%, chip stocks are selling off (SOXX -1.8%) after Texas Instruments, Xilinx, and Qualcomm all provided soft calendar Q2 guidance. TI and Xilinx also missed Q1 sales estimates, while Qualcomm beat.
    • Decliners include Avago (AVGO -3.7%), Qorvo (QRVO -2.5%), Freescale (FSL -3%), STMicroelectronics (STM -3.6%), Atmel (ATML -2.3%), PMC-Sierra (PMCS -2.5%), Fairchild (FCS -2.2%), Cypress (CY -2.1%), Audience (ADNC -6.6%), IDT (IDTI -4.5%), Vishay (VSH -2.9%), AppliedMicro (AMCC -2.3%), and Cavium (CAVM -4.4%). NXP, ON Semi, Linear, Microchip, and Maxim remain lower after falling AH yesterday.
    • With the decliners including many microcontroller, analog/mixed-signal, and telecom equipment chipmakers, TI (TXN -7.3%) might be the biggest culprit: The analog/DSP giant blamed soft telecom equipment and consumer electronics demand for its numbers, with particular weakness in mobile infrastructure (a 2014 strong point) and PCs; auto and industrial demand was healthier.
    • On its CC (transcript), TI attributed the mobile weakness to delayed carrier capacity upgrades. This morning, mobile infrastructure giant Ericsson posted a Q1 miss blamed in part on weak North American 4G spending.
    • Likewise, Xilinx (XLNX -1.3%), which has strong 4G infrastructure exposure, stated on its CC (transcript) wireless sales were weaker than expected due to "continued softness in North America and a weakening in China LTE business." Wired infrastructure sales were in-line, and other markets outperformed.
    • Qualcomm largely blamed its guidance on the iPhone 6's share gains and a loss of chip share at Samsung, rather than industry demand issues. Altera, Freescale, Maxim, Microsemi, and Synaptics report after the close.
    • 8 days ago: Chip stocks rally following Intel/Linear's earnings
    | Thu, Apr. 23, 12:20 PM | 1 Comment
  • Thu, Mar. 26, 10:50 AM
    • The Philadelphia Semi Index (SOXX -1.8%) is now down 6% over the last two days. Today's losses come after NAND flash giant SanDisk issued a Q1 warning and withdrew its full-year guidance - price pressure, soft enterprise sales, and delayed product qualifications were all blamed.
    • Meanwhile, some are partly blaming yesterday's big selloff on cautious remarks from TSMC (has an estimated ~50% global foundry share) at a Credit Suisse conference. CS analyst Randy Abrams reports TSMC (NYSE:TSM) has observed "a slowdown in the past 4-5 weeks due to US$ strength impacting European and emerging market purchasing power," and that inventories "will be a few days above seasonal exiting 1Q15." Pac Crest downgraded TSMC two weeks ago on inventory concerns.
    • Following an Asian trip, Susquehanna's Chris Caso has argued there isn't too much to be alarmed about, though he admits forex could be an issue. "There’s mixed signals here and there. We weren’t picking up anything that was tremendously different across the supply chain. PCs were the weakest area. That’s really not a surprise."
    • RF chipmakers Skyworks (SWKS -4.6%) and Qorvo (QRVO -2.1%), among 2014's best performers, are again selling off; peer Avago is off only slightly. Also seeing further profit-taking are Ambarella (AMBA -3%), NXP (NXPI -3.6%), Freescale (FSL -2.8%), Cavium (CAVM -3.2%), and STMicroelectronics (STM -4.5%).
    • Among equipment makers, Axcelis (ACLS -2.9%), Aixtron (AIXG -3.6%), Veeco (VECO -3%), and Kulicke & Soffa (KLIC -2.5%) are declining. A selloff in European equities could be affecting Aixtron, NXP/Freescale, and STMicro.
    • Update: Credit Suisse, Goldman, and Deutsche have each offered thoughts on the chip selloff.
    | Thu, Mar. 26, 10:50 AM | 3 Comments
  • Wed, Mar. 25, 12:03 PM
    • Chip stocks are particularly hard-hit  (SOXX -3.6%) on a rough day for tech. The Nasdaq is down 1.3%, and the S&P 0.7%. Going into today, good earnings reports and ongoing M&A activity had led the Philadelphia Semi Index to rise 10% from its Jan. 30 close; the index remains up nearly 2x from its fall 2012 lows.
    • AMD (AMD -7.2%) is a major decliner following a UBS downgrade. AMD rival/GPU giant Nvidia (NVDA -5.2%) and memory giant Micron (MU -3.7%) are also selling off, as are merger partners NXP (NXPI -3.8%) and Freescale (FSL -3.4%), RF chipmakers Avago (AVGO -5.2%), Skyworks (SWKS -5.3%), and Qorvo (QRVO -7.1%), LED/RF chipmaker Cree (CREE -4.1%), and high-flying video processor developer Ambarella (AMBA -4.3%).
    • Other decliners include telecom chipmakers/ARM server CPU vendors Cavium (CAVM -4.8%) and AppliedMicro (AMCC -4.4%), microcontroller vendors Atmel (ATML -3.5%), Cypress (CY -5.5%), and STMicroelectronics (STM -3.5%), voice processor developer Audience (ADNC -3.7%), analog/mixed-signal chipmakers Linear (LLTC -3.7%), Maxim (MXIM -3%), and Intersil (ISIL -3.5%), FPGA maker Lattice (LSCC -3.9%), and mixed-signal/wireless charging IC developer IDT (IDTI -5.4%).
    • Chip equipment, IP, and foundry providers are also underperforming. Big decliners include ARM (ARMH -4.4%), KLA-Tencor (KLAC -4.2%), Lam Research (LRCX -5.4%), ASML (ASML -4.1%), TowerJazz (TSEM -4.3%), Mattson (MTSN -4.5%), Ultratech (UTEK -4.7%), and Tessera (TSRA -6.1%). ASML has been downgraded to Hold by Banco Santander.
    • TSMC (TSM -4.6%) is among the decliners in spite of a Digitimes report stating the foundry giant's sales are expected to rise 0%-5% Q/Q in Q2 - consensus is for a 2% drop - with strong Apple A8 CPU orders offsetting soft Qualcomm Snapdragon 810 orders.
    | Wed, Mar. 25, 12:03 PM | 19 Comments
  • Fri, Mar. 13, 10:22 AM
    • Declaring NXP's (NASDAQ:NXPI) $16.7B cash/stock merger with Freescale (NYSE:FSL) will create "a powerhouse in the semiconductor industry," Needham's Rajvindra Gill has launched coverage on NXP with a Strong Buy rating and $140 target.
    • Gill notes NXP/Freescale will be the world's biggest automotive chip and microcontroller supplier (as previously noted by the companies), with respective shares of 13% and 15%. He adds the post-merger company will be a top player in the growing mobile payments and IoT chip markets.
    • NXP/Freescale are expected to see 2016 EPS of $7.44, and 2017 EPS of $9.00. $2.3B/year in free cash flow is considered possible.
    • Also: BofA/Merrill's Vivek Arya is out with a bullish note: He thinks 2018 EPS of $8.40 is possible, with 10%-47% upside via cost synergies, lower interest expenses (as Freescale's high-interest debt gets refinanced), lower taxes, and potential buybacks as the company deleverages.
    • Arya observes Chinese regulatory approval remains a hurdle, and that NXP/Freescale's combined 90%+ base station power amplifier share is a concern, but also notes NXP plans to divest its base station amplifier ops, and has plenty of Chinese experience (previous).
    • Both NXP and Freescale have surged to new highs.
    | Fri, Mar. 13, 10:22 AM | 4 Comments
  • Mon, Mar. 2, 2:52 PM
    • Freescale (NYSE:FSL), fresh off announcing a deal to merge with NXP, has unveiled the S32V, an automotive SoC/vision processor said to provide "the requisite reliability, safety and security measures to automate and co-pilot a self-aware car."
    • The S32V contains a bevy of high-reliability features, as well as private CogniVue's image-processing tech and support for radar, LIDAR, ultrasonic info, and other data streams. It becomes available in July.
    • Mobileye (NYSE:MBLY), whose driver-assistance systems rely on the company's proprietary EyeQ SoC, has sold off in response. Wells Fargo is defending the company, arguing competing in the driver-assistance tech market is easier said than done.
    • Shares have added to the losses seen after a Q4 beat and solid Q1/2015 guidance were provided last week, and are less than $2.50 above a post-IPO low of $31.11.
    | Mon, Mar. 2, 2:52 PM | 7 Comments
  • Mon, Mar. 2, 9:15 AM
    | Mon, Mar. 2, 9:15 AM | 4 Comments
  • Sun, Mar. 1, 9:56 PM
    • Shortly after Reuters reported a deal was close, NXP (NASDAQ:NXPI) has announced it's buying Freescale (NYSE:FSL) for $6.25/share in cash and 0.35 NXP shares for each Freescale share owned.
    • Based on NXP's Friday's close, the deal has a value of $36.14/share, nearly even with Freescale's Friday close. It has an equity value of $11.8B, and an enterprise value of $16.7B after factoring Freescale's net debt.
    • Freescale shareholders will own 32% of the post-merger company. NXP will pay for the deal with $1B in cash on hand, $1B in new debt, and 115M shares. It's expected to close in 2H15.
    • The companies predict $200M/year in cost savings in the first year after closing, and $500M/year eventually. They assert the post-merger company will be "the market leader in automotive semiconductor solutions and the market leader in general-purpose microcontroller (MCU) products." NXP promises the acquisition will be accretive to both EPS and free cash flow.
    | Sun, Mar. 1, 9:56 PM | 14 Comments
FSL vs. ETF Alternatives
Company Description
Freescale Semiconductor Ltd offers embedded processors such as microcontrollers and digital networking processors.