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Tickers in this Article: ALTR, ADI, LLTC, ONNN, NSM, SAI, SKIL, TSM
The semiconductor industry is extremely cyclical in nature, great in the good times, terrible in the bad. The Semiconductor Industry Association reported worldwide sales of $23.1 billion for the month of March. This was a 4.6% increase from February's $22 billion in sales. The first quarter of 2010, sales of $69.2 billion were 58% higher compared to $43.7 billion in the same quarter of 2009.

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March sales were actually a new high, beating November 2007 sales. Back in December of 2007 Taiwan Semiconductor (ADR) (NYSE:TSM) reported a 25% increase in consolidated sales for November. Fast forward to 2010 and again Taiwan Semiconductor reported higher revenues, this time up 133% for the quarter ending March 31, to NT92.2 billion from NT37.6 billion in the same quarter a year earlier. This in an international market which could see more chip producers reporting higher sales.

Semiconductor/Technology Firms

Company
Market Cap
Current Ratio (mrq)
Altera Corp. (Nasdaq:ALTR)
.4B
3.9
Analog Devices, Inc. (NYSE:ADI)
.6B
6.3
Linear Technology Corp. (Nasdaq:LLTC)
.6B
2.3
ON Semiconductor Corp. (Nasdaq:ONNN)
.3B
1.9
National Semiconductor Corp. (NYSE:NSM)
.4B
2.2
SAIC Inc. (NYSE:SAI)
.7B
1.9
SkillSoft plc. (Nasdaq:SKIL)
.06B
1.1


Out Of The Red
ON Semiconductor Corp. produces and supplies semiconductors for a wide range of electronics, including mobile devices, data management and power management. The company released earnings for the first three months of 2010 ending April 2 with $63 million in earnings or 14 cents per diluted share. Earnings were up from the loss of $33.9 million or 8 cents per share one year ago. Revenue was $550 million, up from $379 million in the same quarter one year ago.

Keith Jackson, ON Semiconductor president and CEO, was recorded saying "In the first quarter of 2010, we recorded the highest quarterly gross margin percent in the company's history." Gross margin on a GAAP basis was around 42%. (For more on gross margin, check out Measuring Company Efficiency.)

Is this an isolated occurrence or are there going to be more technology companies beating estimates? Analysts might start increasing estimates on other companies now that strong earnings are coming out for similar companies.

Future Earnings Releases

Company
Earnings Release
Analog Devices, Inc. (NYSE:ADI)
May 18, 2010
SAIC Inc. (NYSE:SAI)
June 3, 2010
Altera Corp. (Nasdaq:ALTR)
June 7, 2010
Linear Technology Corp. (Nasdaq:LLTC)
July 19, 2010


The Bottom Line
Technology consumers can only wait so long before they need to upgrade. During tough economic times, you will tend to hold onto your current cell phone or laptop. Eventually the money starts flowing back into high tech and upgrades, and semiconductors sales will give a hint when this is starting to happen.

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