On Semi (Nasdaq:ONNN) Preferred Over Fairchild Semi (NYSE:FCS) Says Canaccord

After Fairchild Semi (NYSE:FCS) faltered in their latest quarter, Canaccord says they prefer On Semi (Nasdaq:ONNN) over them at this time.

Canaccord said, "Fairchild Semiconductor International stumbled on mixed Q4/10 results. EPS came in at $0.45, ahead of expectations and Q4/09, while revenue of $397.7 fell short of the consensus. European sales led the way, increasing 15% from the prior quarter while sales in North America, Korea and the Asia Pacific declined. Fairchild saw growth in the automotive, industrial and appliance end markets (PICA Product Group), but this was offset by a decline in the MCCC Product Group due to weaker than expected demand in computing. Executive Vice President and CFO Mark Frey provided sales guidance for Q1/11 of $400.0-405.0 million, ahead of the consensus $388.6 million, and estimates gross margins to be flat or down 100 bps (midpoint 36.6%). Canaccord Genuity Technology Analyst Bobby Burleson believes higher R&D spending associated with new products is likely to hamper operating margin expansion in 2011 unless the company generates better than expected revenue growth. He is estimates that Q1/11 revenue will come in at $383.4 million and gross margins at 35.3%. Burleson remains neutral on Fairchild and continues to prefer On Semiconducter (Nasdaq: ONNN) saying it is the best way to play a shallower than expected inventory correction for analog semiconductors."

On Semiconductor closed Friday at $10.85, dropping $0.22, or 1.99 percent. Fairchild Semiconductor closed Friday at $16.24, losing $0.02, or 0.12 percent.