Freescale Semiconductor was bought by a private equity group in December 2006. Quarterly results since then have been disappointing. Although recently released 2Q 2007 results are up from 1Q 2007, results are still way behind comparable quarters before the company was taken private. There are numerous reasons for the last two quarters' worth of disappointing results. The first is that there continue to be many expenses related to the company's acquisition. The company also took on a heavy debt load in its acquisition. Most importantly, the wireless market overall is in a period of contraction, so sales are in decline. This is particularly true of Freescale's largest customer, the automotive industry. Freescale CEO Michael Mayer offered no prediction as to when the wireless market might become more active.

Net sales have been essentially flat in 1Q and 2Q 2007, at $1.36 billion and $1.38 billion respectively. Each of the three operating segments within Freescale lost money in 2Q 2007 when compared to a comparable quarter in 2006. The Transportation and Standard Products segment lost $92 million from 2Q 2006, posting earnings of $159 million. The Networking and Computer Solutions segment posted earnings of $328 million, down $42 million from 2Q 2006. The biggest loser by far was the Wireless and Mobile Solutions segment, which posted earnings of $353 million, down $161 million from 2Q 2006 earnings. With results like this it is no wonder Freescale has now turned to layoffs in order to cut costs, but ended up with a $38 million charge against earnings for severance costs. Losses continue to mount. Net losses for 2Q 2007 amounted to $288 million, while operating losses amounted to $268 million. If this rate of loss continues, look for Freescale to be resold or perhaps even taken public again.

Freescale Semiconductor still trying to recover originally appeared on BloggingStocks on Sat, 25 Aug 2007 12:10:00 EST. Please see our terms for use of feeds.