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Freescale grows Q2 earnings on flat sales

Stepping out of Motorola's shadow

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Freescale, the company still making G4-class PowerPC processors for Apple's notebook line-up, saw a big jump in income during its second fiscal quarter, despite an only marginal increase in sales, the firm said yesterday.

Sales totalled $1.47bn, up 2.1 per cent from $1.44bn in Q1 FY2005 and up just under a single percentage point from Q2 FY2004's $1.46bn.

Net income was $122m (29 cents a share), rather better than the $85m (20 cents a share) Freescale reported for the previous quarter and the year-ago quarter's $43m (15 cents a share) income.

Then again, Q2 was hit by a $5m expense relating to Freescale's split from Motorola, compared to $39m a year ago and $18m in the previous quarter.

Gross margins for the quarter were calculated to be 41.6 per cent, Freescale said.

Drilling down, the company's Network and Computing Systems business yielded $387m worth of sales, up 10.9 per cent sequentially but down 2.8 per cent year on year. The division's earnings contribution was up 32.4 per cent sequentially and year on year to $94m, Freescale said.

The company's Transportation and Standard Products operation contributed $667m to the quarter's sales and $87m in earnings. Wireless and Mobile Solutions added $401m and $5m, respectively, to those figures - the division's earnings were well down on the previous quarter, but nonetheless an improvement on the year-ago quarter's $43m loss. Other operations together lost $47m during Q2 FY2005.

Looking ahead, Freescale said it's anticipating Q3 to yield sales of between $1.38bn and $1.47bn, flat or down on the current quarter but consistent with seasonal sales patterns. Gross margins will match Q2's figure, it forecast. ®

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