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ON Semiconductor Corp. Reports Operating Results (10-K)

February 24, 2011 | About:

ON Semiconductor Corp. (ONNN) filed Annual Report for the period ended 2010-12-31.

On Semiconductor Corp. has a market cap of $4.72 billion; its shares were traded at around $10.9 with a P/E ratio of 12.5 and P/S ratio of 2. Hedge Fund Gurus that owns ONNN: Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns ONNN: HOTCHKIS & WILEY of Hotchkis & Wliey Capital Management LLC, Columbia Wanger of Columbia Wanger Asset Management, Pioneer Investments, Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

Subsequent to year end, we completed the purchase of SANYO Semiconductor and certain other semiconductor related assets of SANYO Electric Co., Ltd (SANYO Electric), whereby SANYO Semiconductor became our wholly-owned subsidiary. The aggregate purchase price of this transaction as defined in the stock purchase agreement was approximately ¥54.0 billion ($663 million), subject to certain post-closing adjustments. As a result of the liabilities assumed in the transaction, the consideration paid, which remains subject to certain post closing adjustments, was approximately ¥43.5 billion ($520 million) and is comprised of ¥11.8 billion in cash and $377.5 million in debt. We believe that this acquisition provides us with access to market-leading Japanese and Asian customers, while providing SANYO Semiconductor customers with access to advanced front-end mixed-signal and analog manufacturing, and ultra high volume back-end facilities. Ultimately, we believe that the combination of SANYO Semiconductor operations with our existing operations will provide us with highly complementary products, customers and geographic regions.

Since our 1999 recapitalization, we have had relatively high levels of long-term debt as compared to our principal competitors. During 2003, we began undertaking measures to reduce our long-term debt and related interest costs. As a result of these continuing measures, we reduced our total debt from $1,302.9 million as of December 31, 2003 to $888.8 million as of December 31, 2010. We also reduced our interest expense from $151.1 million for the year ended December 31, 2003 to $61.4 million for the year ended December 31, 2010. See Part II, Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations, Note 7: Long-Term Debt and Note 9: Equity of the notes to our audited consolidated financial statements included elsewhere in this report for current debt levels and annual interest expense.

On January 27, 2010, we completed the purchase of California Micro Devices Corporation (CMD), pursuant to a tender offer at a price of $4.70 per share of CMD stock, whereby CMD became our wholly-owned subsidiary. The aggregate purchase price of this all cash transaction was approximately $113.2 million. We believe that the combination has strengthened and will continue to strengthen our offering of application specific integrated passive (ASIP) devices to protect products in the wireless, computing and consumer electronics end-markets. In addition, CMDs expertise in protection solutions for the high brightness LED (HBLED) market, as well as their strengths in low current-based EMI (electromagnetic interference) filtering and low capacitance ESD (electrostatic discharge) protection, complement our existing portfolio of protection and lighting solutions.

On June 9, 2010, we completed the purchase of Sound Design Technologies, Ltd. (SDT), whereby SDT became our wholly-owned subsidiary. The aggregate purchase price of this transaction was approximately $22.0 million. Additionally, in connection with this purchase agreement, we recorded a contingent liability of $1.8 million, which had a balance of $1.1 million at December 31, 2010 and represents the estimated fair value of our earn-out obligations triggered if SDT is able to meet certain revenue targets in any of 2010, 2011 or 2012. We believe that this acquisition has strengthened and will continue to strengthen our position as a leading supplier of ultra-low power digital processing (DSP) technology for hearing aids and audio processing applications, strengthens our talent base and adds an experienced design and applications engineering team for medical

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