Briefing.com on Fairchild Semiconductor (FCS):
Fairchild Semiconductor (FCS) 33 13/16 -7/8: Chalk it up to bad timing as Fairchild Semiconductor hasn't gotten much distance out of its announcement that it expects revenues and earnings for its first quarter to come in ahead of expectations. Never mind the fact that this news marks the second time since its last earnings report that Fairchild has guided estimates higher for sales growth and gross margin improvement. As per the previous guidance, Fairchild is acknowledging today that higher than expected sales from new product introductions, especially power and interface products, will result in higher operating margins and a sales increase of approximately 10% from the fourth quarter. Accordingly, the company's adjusted earnings per share is expected to be "proportionately higher" than the current consensus estimate of $0.38 per share. Just a few weeks ago, Fairchild had said revenues were tracking 6% higher than the previous quarter. Communications end markets, along with computer and consumer applications, have been driving the sales growth which is expected to continue as the company has noted current order rates remain strong. Fairchild Semiconductor is expected to earn $1.65 per share in FY00 and $2.07 in FY01. In addition to the earnings news, Fairchild also announced today Phase II of its growth strategy which is highlighted by the company's goal to achieve at least 10% market share in its respective segments and to double its revenues by 2002. Fairchild will pursue a three-pronged initiative as it attempts to reach those benchmarks, targeting R&D to expedite new product introductions, increasing capacity through capital investment, and making strategic acquisitions that are financially sound and will be accretive immediately. Regrettably, the noise surrounding the Nasdaq meltdown has diminished the positive impact of these announcements. However, in our estimation, it provides yet another indication why the chip and chip equipment industries are among the first places one should begin to look to do some bargain hunting when the dust settles. The fundamentals are sound, earnings estimates are being raised, and the newsflow is predominantly positive. Fairchild Semiconductor qualifies in each of those respects, and along with its compelling valuations, provides investors added reason to include its stock on your shopping list. |
