ON Semiconductor Corporation Q2 2009 Earnings Call Transcript

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2009-08-05 19:16:17.0

Tags: Barclays Plc., Call Transcript, Quarter, Earnings, Semiconductor, GAAP, Financial Accounting, Finance, Seeking Alpha, ON Semiconductor Corp.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from Romit Shah of Barclays Capital.

Romit Shah - Barclays Capital

Last quarter, if I remember correctly, you had guided with 80% backlog coverage and in this quarter you are guiding with 90% backlog coverage. Could you just give us a feel for why you are being more conservative with the outlook for the third quarter?

Keith Jackson

Well. Two things 10% is our more normal filler rate Romit, if you look at our long-term trends and so we normally do go in that amount. In the second quarter we knew that things have been depleted and I had heard from customers that they were going to be doing more turns, I think Q3 will be a more normal pattern for us and so again we are back into that 10% range. Then secondly, again just looking at how these order patterns have come in we do believe that there was some concern in our customer base for supply during the seasonal up Q3 and a lot of those orders came in earlier than they would have on a comparable quarter in Q2.

Romit Shah - Barclays Capital

And in terms of, you know what's driving your business in Q3. Is it similar to what we saw in Q2 at computing sort of leading the way?

Keith Jackson

Certainly computing will be a strong piece of that as well as the other consumer areas like the gaming and consumer communications devices. So, really it's, it is a consumer led increase and that was indeed very similar to Q2.

Romit Shah - Barclays Capital

Okay. And then, just my last question on operating expenses. Don, you said in the past that you had about $10 million in temporary savings. Are we seeing any of that come back here in the third quarter?

Donald Colvin

Not really. You're right. I think it's fairly fair to say that we were very, very pleased with our operating expense performance in the third quarter. We have been guiding much higher than the numbers that came in. We've been guiding something like $108 million. We came in just under a 100, and so the guidance for the third quarter on a non-GAAP basis will be a little bit back, to maybe a couple of million, but not anything substantial get back albeit, of a much lower base than we had previously guided. So, I think we're seeing the additional benefit of the strong cost reduction actions. And as I mentioned in the formal part of the script, we have done approximately 30% in our operating expenses compared to the third quarter of last year on an apples-for-apples basis excluding non-cash based stock comp for revenue that’s been less than that. So we are actually seeing some leverage from very aggressive and fruitful operating expense control.

 

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