Freescale earnings grow post-restructure

Business picking up

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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