Freescale CEO targets Q3 for new strategic plan

Freescale CEO targets Q3 for new strategic plan

SAN FRANCISCO—Freescale Semiconductor Inc. President and CEO Gregg Lowe said Thursday (July 19) that the company expects to complete by the end of the third quarter an analysis of the company's product groups and core markets and implement a new strategy that will likely shift resources to focus on company's best opportunities to drive revenue growth and gross margin expansion.  

Lowe's comments—which expanded on similar statements he made during last month's Freescale Technology Forum—came in a conference call with analysts after Freescale reported second quarter results in line  with analysts' estimates but gave a third quarter sales target that fell short of expectations.

Lowe said Thursday that the company continues a comprehensive assessment of its strengths, weaknesses and market opportunities that began with his appointment early last month. He said the company intends to complete this assessment during the quarter and communicate the results to all stakeholders at the beginning of the fourth quarter.  

"This will likely lead to changes in how we allocate our opex, shifting resources into areas that we believe will help us increase top line growth and expand our margins," Lowe said.

Freescale's gross margin grew to 42.8 percent in the second quarter, up from 42.3 percent in the first quarter, mostly due to an increase in intellectual property licensing revenue. Lowe's stated goal is to increase the company's gross margin to between 53 and 55 percent.

Lowe offered up a glimpse at the type of spending changes Freescale is likely to make, announcing that the company would eliminate its corporate jet and associated flight operations. "This represents a significant savings for the company and will have zero impact on growth," Lowe said.

Allan Campbell, Freescale's chief financial officer, said the company benefited from strong customer orders through most of the second quarter,  but that orders weakened in the second half of June. Orders have recovered somewhat in July, Campbell said, but not to the level of April and May, leading to Freescale forecasting a sequential sales decline for the third quarter.



Next: Q2 sales, profit and Q3 forecast
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