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NXP's 3Q earnings fall 18 pct, more struggles seen

Tue, 11/01/2011 - 1:05pm

NXP Semiconductors' third-quarter net income dropped 18 percent amid a downturn in customer orders that the Dutch electronics chip maker expects to deepen.

The bleak forecast helped push the stock down more than 6 percent Tuesday.

NXP Semiconductors N.V. said it earned $301 million, or $1.21 per share, in three months ended Oct. 2. That compared to net income of $369 million, or $1.55 per share, at the same time last year.

Excluding items unrelated to its ongoing business, the company said it earned 50 cents per share.

The average estimate among analysts polled by FactSet was 53 cents per share.

Revenue for the period totaled $1.06 billion, a 5 percent decrease from the same time last year. Analysts had anticipated revenue of $1.09 billion.

NXP also offered a sobering assessment of the current quarter and suggested it could face more adversity next year, too, as its customers manage inventories more cautiously in a weak economy.

NXP CEO Richard Clemmer said he didn't expect orders to pick up until the company's customers were more confident about demand for their own products.

The company, which is based in The Netherlands, makes chips used in televisions, automobiles, phones, lighting systems and personal computers. Its largest customers include: Apple Inc., Continental, Delphi, Harman/Becker, Nokia, Panasonic, Philips, Sony and Samsung.

"We anticipate order patterns over the next few quarters will continue to be volatile," he said in a statement.

NXP's challenges aren't isolated. Other makers of electronics chips also have been grappling with weakening demand as their customers tread more cautiously in a still-shaky economy.

Although it didn't state a specific number, NXP's projections implied revenue in the current quarter will range from about $900 million to $965 million. The calculation is based on management's prediction that NXP's product revenue will decline 8 percent to 14 percent from $970 million booked in that category during the third quarter. The company's revenue from its other segments is expected to total $70 million in the fourth quarter, down from $90 million in the third quarter.

Excluding certain items, NXP forecast earnings per share ranging from 20 cents to 30 cents.

Analysts surveyed by FactSet had been expecting fourth-quarter earnings of 55 cents per share on revenue of $1.09 billion.

The company has also focused on reducing its debt burden. Its net debt stood at just under $3 billion at the end of the third quarter, down from $3.7 billion at the same time last year.

NXP's shares fell $1.13, or 6.3 percent, to close at $16.84 Tuesday.

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