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Freescale earnings grow post-restructure

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Freescale, Motorola's erstwhile chip division, saw its income jump during Q1 FY2005 as it started to put the cost of last year's layoffs behind it.

The quarter yielded sales of $1.44bn, up a mere fraction on the previous quarter's $1.43bn and the year-ago quarter's total, $1.4bn.

Income for the three-month period came to $85m (20 cents a share), well up on Q4 FY2004's $5m (one cent a share) but down 19.8 per cent on the $106m it posted this time last year. The previous quarter's earnings were blitzed by the cost of laying off 1,000-odd workers and costs arising from the split with Motorola.

The restructuring costs continued into Q1, with $18m coming off the bottom line. And the year-ago figure was boosted by a $54m gain from the sale of a Chinese chip-plant.

Freescale's gross margins topped 40.2 per cent during the quarter, up from 36.3 per cent in the year-ago quarter and 36 per cent in Q4 FY2004.

The company's computing products group saw sales grow from last quarter's $314m to $349m, though that's still below the year-ago quarter's level, $389m. The division continues to supply Apple with G4-class PowerPC microprocessors for the Mac maker's iBook and PowerBook laptop lines.

The wireless products business, by contrast, was up year on year, but down sequentially, with sales of $412m. That compares to $465m in the previous quarter and the $354m reported this time last year.

Looking to Q2, Freescale said it expects sales to lie between $1.38bn and $1.47bn. Margins will stay at around 40.2 per cent. ®

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