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ON Semi, Allied Electronics Team Up

Zacks Equity Research

ON Semiconductor (ONNN) and Allied Electronics have entered into a distribution agreement in a bid to offer a varied portfolio of energy-efficient products.

Texas-based Allied Electronics is a distributor of electronic components and electromechanical products and has a presence in 50 locations across the U.S. and Canada. It originally started in 1928 as the distribution division for the radio parts of Columbia Radio Corporation. In 1999, Allied Electronics was acquired by British company Electrocomponents, which is a distributor of electronics and maintenance products. Currently, Allied Electronics has 110,000 products in its catalogue with support from 300 suppliers.

On the other hand, ON Semi’s product portfolio consists of energy-efficient power and signal management, logic, discrete and custom solutions and it serves a broad base of end-user markets, including automotive, communications, computing, consumer, medical, industrial, smart grid and military/aerospace.

The collaboration will benefit both as they will be able to offer unique energy-efficient solutions for various electronic applications used in various end markets thus meeting end users’ demand effectively.

ON Semi reported revenues of $661.0 million in the first quarter of fiscal 2013, down 2.8% sequentially and 11.2% year over year. Reported revenues were within management’s guidance range of $645.0–$685.0 million.

On a pro forma basis, ON Semi reported a net income of $44.7 million or a 6.8% net income margin, compared with $37.0 million or 5.4% in the previous quarter and $57.5 million or 7.7% in the year-ago quarter.

ON Semi carries a Zacks Rank #2 (Buy). Other semiconductor stocks that are equally worth considering include STMicroelectronics NV (STM), Magnachip Semiconductor Corp. (MX) and Lam Research Corp. (LRCX), all carrying a Zacks Rank #2 (Buy).

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