Shares in ON Semiconductor (ON 0.05%) were up as much as 10% on the opening of trading today. The move comes after a satisfactory set of fourth-quarter earnings and first-quarter guidance. I've used the word "satisfactory" because the figures weren't anything outstanding. The company's revenue came in slightly above the midpoint of management's guidance, and the earnings per share of $1.25 in the fourth quarter were at the high end of the guidance range of $1.13 to $1.27.
NASDAQ: ON
Key Data Points
That's good enough, however the first-quarter revenue guidance of $1.8 billion to $1.9 billion is below the Wall Street consensus of $1.92 billion.
What management didn't say
Still, the good news wasn't so much about the numbers and what management said as it was about what management didn't say.
During the third-quarter earnings release at the end of October 2023, CEO Hassane El-Khoury lowered expectations for its silicon carbide solutions sales from $1 billion to just $800 million due to "a single automotive OEM's recent reduction in demand," referencing "pockets of softness with Tier 1 customers in Europe working through their inventory and increasing risk to automotive demand due to high interest rates."
Image source: Getty Images.
Given this kind of commentary in October and the ongoing stress that relatively high interest rates place on the automotive industry, it's understandable that many investors may have feared the worst. However, the fact that the company appears to be more or less on track is a relief and suggests some stabilization in its end markets. That's good news for a company exposed to some exciting megatrends in electric vehicles and industrial automation, and one whose best days are yet to come.
