ON Semiconductor ON reported first-quarter 2016 non-GAAP earnings of 17 cents that exceeded the Zacks Consensus Estimate by a couple of cents.RevenuesON Semiconductor reported revenues of $817.2 million, down 2.7% sequentially and 6.2% year over year. However, reported revenues were toward the lower end of the company's expected range of $800.0–$840.0 million. Revenues missed the Zacks Consensus Estimate of $819.0 million.Revenues in the quarter were impacted by overall weakness in the computing and smartphone markets, partially offset by accelerating momentum in the automotive market.Revenues by End MarketAutomotive accounted for 40% of total revenue. Segment revenues were up 9% on a sequential basis, driven by strong demand for automotive image sensors. Also, power regulation solutions for infotainment and body electronic module applications led to the strong revenue performance in the first quarter.Industrial/Military/Aerospace/Medical contributed 22% to total revenue, down 7% from the prior quarter. The company witnessed broad-based weakness in the industrial market due to lower demand in the security segment.Communications (both networking and wireless) accounted for 17% of revenues and declined 10% on a sequential basis. The decline was attributed to weakness in the premium segment of the smartphone market and seasonality.Consumer brought in 11% of total revenue, down 11% sequentially. The decline was due to normal seasonality and steep inventory correction in the action and sports camera market.Computing generated 11% of total revenue, down 10% from the last quarter due to weakness in overall markets like hard disk drives and power supplies.MarginsPro-forma gross margin was 33.7%, up 50 basis points (bps) sequentially but down 78 bps year over year. The sequential increase was largely driven by higher utilization rates and an improved product mix.ON Semiconductor incurred operating expenses of $189.2 million, 1.8% higher than the previous quarter but down 5.6% from the year-ago quarter. The company reported an operating margin of 10.6%, down 53 bps sequentially and 92 bps year over year.Net ProfitOn a pro-forma basis, ON Semiconductor reported net income of $70.3 million or 17 cents per share compared with $78.9 million or 19 cents in the previous quarter and $87.1 million or 20 cents in the year-ago quarter. Our pro-forma estimate for the reported quarter excluded restructuring, intangibles amortization and other charges on a tax-adjusted basis but included stock-based compensation. Our calculation may differ from the company’s presentation due to the inclusion/exclusion of some items that were not considered by management.On a GAAP basis, the company recorded net income of $36.0 million or 9 cents per share compared with $54.1 million or 13 cents per share in the previous quarter and $55.1 million or 13 cents per share in the year-ago quarter.Balance SheetCash and short-term investments balance was $619.5 million at the end of the quarter compared with $617.6 million in the prior quarter. Inventories were $759.7 million compared with $750.4 million in the previous quarter.At the end of the reported quarter, ON Semiconductor had $835.1 million in long-term debt. Cash flow from operations for the quarter was about $114.9 million compared with approximately $157 million in the previous quarter. The company spent $73 million of cash for the purchase of capital equipment and $45 million was used for the repayment of long-term debt in capital leases.GuidanceON Semiconductor expects second-quarter revenues in the range of $835.0–$875.0 million, with the mid-point being $855.0 million. The Zacks Consensus Estimate is pegged at $853.0 million.Gross margin is expected in the 33.3% to 35.3% range both on a GAAP and a non-GAAP basis. Operating expenses, on a GAAP basis, are expected within $215 million to $227 million, and $190 million to $200 million on a non-GAAP basis. The company also expects other income/expense within $38.0–$41.0 million on a GAAP basis and $7.0–$10.0 million on a non-GAAP basis.Taxes are expected in the band of $3–$7 million on a GAAP basis and $5–$9 million on a non-GAAP basis, with a share count of 416.0 million.ConclusionON Semiconductor has a well-diversified business and an end-market focus that would typically generate relatively steady revenues throughout the year. The company’s bottom line exceeded our expectation while the top line missed the same.The company witnessed continued strength in orders in the reported quarter and expects the momentum to continue in the near- to mid-term based on a solid design win pipeline.Though macroeconomic conditions remain weak, the end-market demand trend is, however, favorable due to seasonality. Management expects all end markets, namely, communication, automotive, industrial and consumer to increase sequentially in the second quarter. However, the computing market is expected to remain flat in the upcoming quarter.During the quarter, the company also provided an update on its acquisition of Fairchild Semiconductor International Inc. The deal is expected to close by the middle of this year. The company has received approvals from regulators in Germany and Japan and the required financing for the transaction has also been secured. The acquisition will lead to the creation of a leader in the power semiconductor space with combined revenues of roughly $5 billion, diversified across manifold markets with a planned focus on smartphone, automotive and industrial end markets.The company has an attractive product portfolio and is an outstanding manufacturing and operational organization. Currently, it is streamlining its costs, which, in addition to its assets will boost revenues and cash flow.ON Semiconductor has a Zacks Rank #2 (Buy).Investors may also consider stocks like M/A-Com Technology Solutions Holdings, Inc. 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