Chipmaker ON Semiconductor (NYSE: ON – $21.09) reported third quarter net income of $0.33 per share, down from last year’s $0.57 and below the average analyst estimate of $0.36. Revenue was $1.38 billion, a 10% drop from the year earlier period and in line with Street view. The company is guiding revenue for the fourth period to range from $1.35 billion to $1.40 billion, bracketed by analysts’ expectations of $1.37 billion. Despite the mediocre numbers, the results were better than what Wall Street feared based on some recent results and guidance from other semiconductor companies. The shares popped about 8% on the news.
Although inventory balances for key OEM partners remain on the decline, this is unlikely to have an immediate impact on the company’s top line. According to managements comments, business conditions show modest signs of improvement as supply chain inventories have normalized and orders are trending along normal seasonality. However, global macroeconomic and geopolitical uncertainty persists, and visibility into end-market demands remains limited. Despite the current challenges, key drivers powering ON’s business remain intact, and the company is seeing strong traction in key areas of strategic thrust. Considering investments in automotive, industrial and cloud-power markets, the company believes they are well positioned to deliver strong revenue and margin performance. Thus, over the long-term, aggressive accounts seeking price recovery potential may consider a position here.