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ON Semiconductor Corporation Message Board

  • scr8934 scr8934 Feb 6, 2003 6:08 PM Flag

    What the heck is this all about?

    Any translation for the business illiterate such as myself? Anyone know just what is LLC?

    PHOENIX--(BUSINESS WIRE)--Jan. 29, 2003--ON Semiconductor (Nasdaq:ONNN - News) today announced that it and its wholly-owned subsidiary, Semiconductor Components Industries, LLC, have commenced an offer to exchange $300 million aggregate principal amount of their registered 12 percent senior secured notes due 2008 for any and all outstanding unregistered 12 percent senior secured notes due 2008.
    A written prospectus providing the terms of this exchange offer may be obtained through the exchange agent -- Wells Fargo Bank Minnesota, National Association, Corporate Trust Department, at 213 Court Street, Suite 703, Middletown, Connecticut 06457. This exchange offer that commenced on Jan. 29, 2003, expires at 5 p.m. Eastern time (EST) on Feb. 28, 2003.

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    • As far as I know operating margin means margin from operations, which essentially the same as gross margin and not at all the same as earnings, gross or otherwise.

      And I stand by my comment -- ONNN has zero chance of achieving 30% operating margin (or gross margin if you prefer) this year. Margins are headed lower. Sales contracts are annual in nature and KJ says they will eat at least 2% out of current margins. No new products of any consequence have been introduced or announced in months. Sales volume continues to slide and put pressure on costs.

      Why do you think 30% gross margin is "easily achievable"? What will make that happen? I just don't see it.

    • You guys are referring to 2 defend things. Jackson meant Gross margins would exceed 30% by the end of the year (this is very achievable for them), not operating margin. Operating margin is presently negative, Jackson is predicting it will go positive (most likely less than 5%) by the 4th Q. LT has gross margins of 70%+, and operating margins of 30%.

    • No problem on the KJ slip ... I didn't even catch it right away.

      <2005 may be the year of tech mergers and acquisitions. M & A's motives vary, portfolio aquisition, geographic-aquisition, fire-sale, etc.
      Investors may be itching take the cash off the sidelines and put it into play once again, but they want "tangible assets" , not web-portal-pipe-dreams... >

      But I don't think it would play out that way. ON's hard assets (factories, etc) may be valuable, but are worth only a small fraction of the debt that ON is carrying. If ON goes bankrupt, ON's competitors would be able to buy them at a reasonable price from the banks. ON's soft assets (management, intellectual property, employee morale, market position, channels to market, customer credibility) eroded so badly under SH and team that they don't sweeten the pot very much. Remember that debt is a balance sheet item and decreases net assets. ON has negative "tangible assets".

      I just don't see a buyout as a probable path to recovery unless the banks decide to cut their losses and reduce the debt significantly as part of the deal.

    • >>It's Jackson ... Keith Jackson. <<<
      hmmm... kevin johnson (?)freudian slip of the tongue...my apologies..

      > And I'm not sure TPG hired him to sell or merge the place ... that's TPG's expertise and they don't need to hire it. <

      ok...think of TPG as the property owner, and hiring an experienced "contractor" (kj) to clean up the house.

      > But keep in mind that the journey you want to follow him on could lead to bankruptcy. <

      I do not beleive TPG would want their record "blemished" with a bankruptcy.

      >Give me one reason why any of ON's competitors would be willing to absorb $1.5 billion dollars in debt to buy it or merge with it. <

      "speculative reasoning".........
      2005 may be the year of tech mergers and acquisitions. M & A's motives vary, portfolio aquisition, geographic-aquisition, fire-sale, etc.
      Investors may be itching take the cash off the sidelines and put it into play once again, but they want "tangible assets" , not web-portal-pipe-dreams...

    • It's Jackson ... Keith Jackson.

      And I'm not sure TPG hired him to sell or merge the place ... that's TPG's expertise and they don't need to hire it.

      <He knows what he wants, (they would not of hired him if he did not)..>

      I'd like to believe that, but remember that TPG kept Steve Hanson around long after everyone else (employees, customers, distributors, competitors) realized he was out of his league. At least KJ has a credible history of actually doing something, so I'll cut him some slack for now.

      But keep in mind that the journey you want to follow him on could lead to bankruptcy. There are solid reasons why a billion dollar company (in terms of revenue) which once had a leading image in its marketplace now has a risk-adjusted valuation of only one fourth of its annual sales and a negative accumulated net worth on its balance sheet.

      Give me one reason why any of ON's competitors would be willing to absorb $1.5 billion dollars in debt to buy it or merge with it.

    • Quit 'racking' your brain... you do not get paid enough. I you must know.. ask KJ.

      He does get compensated to figure out this answer. Remember,its all strategy, challenge,options, @ money....

      He knows what he wants, (they would not of hired him if he did not)................

      analyzing the business,valuating a staff,and implementing the strategy... a master plan.

      I would welcome the opportunity that he has.
      Taking the bottom of the barrell, float the debt, and implement the merge/sale,when the market dictates.....

      My advise....go with him on this journey.
      Good Luck ON'ers !!!!

      =========================================
      >>>> i've been racking my brain thinking about who would buyout ON. In my opinion, I see these options:
      +++++++++++++++++++++++++++++++++++++++++
      >>F-child- has been peaking at ON but hs always looked away due to the debt burden. They may go after ON but there recent entry into the ECL market makes me think that nothing will happen short term from them.

      Vishay - the discrete division would fit their model
      Micrel - Very doubtful, but it would be a great move on their part to gain ON's ECL presence.
      Texas Instruments - Seems like a great fit. Head offices close to each other (Dallas vs. Phoenix). TI could buy the whole enchilada. Take the discrete division and ECL division in which they have no lines. Dump any areas which TI has a commonality, use ON's strengths overseas. Plus TI has the ability/funds to make this work. <<<<<<
      +++++++++++++++++++++++++++++++++++++++++++

    • I agree with your comments about Fairchild, Vishay, and Micrel, but I don't believe TI would ever consider buying ON, especially their discretes. TI got out of discretes many years ago to focus on higher end products, a strategy that worked very well for them. They would get very little synergy from anything ON has to offer.

      And TI already has a commanding share of the logic business worldwide with profitable product families fairly dissimilar to ON's money losers.

      The operating cultures are quite different as well.

      Fairchild or Vishay would make the most sense, but I don't think either has the financial stamina to swallow ON's poison pill (their debt). Philips might also be a candidate to buy ON in the right market, except that they are probably taking significant share from ON and don't need to.

    • i've been racking my brain thinking about who would buyout ON. In my opinion, I see these options:
      Fairchild- has been peaking at ON but hs always looked away due to the debt burden. They may go after ON but there recent entry into the ECL market makes me think that nothing will happen short term from them.

      Vishay - the discrete division would fit their model
      Micrel - Very doubtful, but it would be a great move on their part to gain ON's ECL presence.
      Texas Instruments - Seems like a great fit. Head offices close to each other (Dallas vs. Phoenix). TI could buy the whole enchilada. Take the discrete division and ECL division in which they have no lines. Dump any areas which TI has a commonality, use ON's strengths overseas. Plus TI has the ability/funds to make this work.

      Just an opinion but it makes sense to me

    • >>Look for a buyout maybe not of ON in general but their discrete division or their ECL division. The only thing that has stopped other companies to purchase them has been ON's debt burden.<<

      I agree. Some of the ECL devices are very high dollar but at the moment, that market is tanked. Sell off a division and use the money to pay down debt for better financial position. Standard products still sells. So, which one do you let go?

      ST
      ~The Alchemist~

    • 1] the bottom has dropped out of that (ECL) market for the past 2 years, and 2] it appears some other suppliers may have finally figured out this secret and are poised to drive those margins down into the dirt by the time the market recovery finally occurs.

      Yes, I believe you are right on both counts. Are you still inside the ropes with ON, UBERZEPHYR? I split that grind. Much happier now on my own. If you're still there, good luck, and be sure to keep the rest of us on this board up to speed on what's REALLY going on in Happy Land.

      Take care,
      IO

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