UPDATE 2-ON Semiconductor Q4 beats estimates, sees strong Q1 rev

Wed Feb 3, 2010 6:19pm EST

* Q4 adj EPS $0.19 vs $0.14 est

* Q4 revenue rose 2 pct

* Sees Q1 rev $515 mln-$525 mln (Recasts; adds analyst comments, details)

By Manasi Phadke

BANGALORE, Feb 3 (Reuters) - Chipmaker ON Semiconductor Corp (ONNN.O) posted a better-than-expected quarterly profit, helped by a drop in operating expenses, and forecast first-quarter revenue above Wall Street expectations due to sequentially higher backlog.

Shares of the Phoenix-based company dipped about 1 percent to $7.79 in trading after the bell. They closed at $7.86 Wednesday on Nasdaq.

"Ever since Intel set the ball rolling, expectations have been very high for most semiconductor companies," Brigantine Advisors analyst Ramesh Misra said.

"It doesn't surprise investors anymore that semiconductor companies are posting beat-and-raise results."

Last month, Intel Corp (INTC.O) posted solid fourth-quarter results and gave a bullish margin outlook on higher prices and firm demand for server chips, lifting hopes of a rebound in the chip sector. [ID:nN13151343]

ON Semiconductor, which makes audio and power-management chips used in mobile phones, cars and portable electronics, forecast first-quarter revenue of $515 million to $525 million.

Analysts were looking for $479.3 million, according to Thomson Reuters I/B/E/S.

"It's reasonable to expect that ON will get back to its record revenue levels in a couple of quarters," Misra said.

The company's backlog at the beginning of the first quarter was sequentially higher and forms 90 percent of the revenue outlook, the company said.

"From a semiconductor supplier's perspective, we expect to see a pretty good first half driven by consumers, and a strong second half driven by enterprise," Chief Executive Keith Jackson said on a conference call with analysts.

The company also said it delayed a previously announced factory closure in Phoenix to sometime around the third quarter due to strong demand. The company expects a benefit of about $5 million to $8 million per quarter from the closure.

ON, which recently agreed to acquire California Micro Devices Corp CAMD.O, returned to profitability in the third quarter of 2009 after incurring losses for three consecutive quarters as it was hit by slumping demand for electronics due to the economic slowdown.

For the fourth quarter, ON earned $68 million, or 15 cents a share, compared with a loss of $524.7 million, or $1.28 per share, a year ago.

Revenue rose 2 percent to $497.1 million, while analysts were expecting $491 million.

Excluding items, the company, whose competitors include Texas Instruments Inc TXN.N, Intersil Corp (ISIL.O) and Fairchild Semiconductor International Inc FCS.N, earned 19 cents a share, ahead of analysts' expectations of 14 cents.

The company benefitted from an 84 percent drop in operating expenses in the fourth quarter. (Reporting by Manasi Phadke in Bangalore; Editing by Jarshad Kakkrakandy, Anne Pallivathuckal)