Atmel Corporation (ATML) recently unveiled its latest ATA664151 and ATA664251 LIN family of devices, which can be used for automotive switch scan processes and in-vehicle ambient lighting control systems. Atmel’s newly-introduced product ranges consist of on-chip functionalities.
The ultra-miniLIN platform is particularly designed for minimizing the end-application footprint as well as the overall power consumption process. The company’s newly introduced device will be supporting switch scan applications to reduce its overall energy consumption.
Atmel is in the process of transforming itself into a purely microcontroller-based company, which it believes will augment its cost structure and unlock value. The company is focusing more on its core microcontroller business through introducing the latest products with the aim of targeting high-growth and high-margin businesses. Going forward, the growing microcontrollers business is expected to enhance the company's top-line growth. In addition, the introduction of these devices would surely further expand Atmel’s portfolio of automotive-qualified devices.
Recently, the company reported net sales of $361 million in the third quarter of 2012, down 24.7% year over year and 2% sequentially. Net sales in the quarter were within management’s previously provided guidance range of $357 million – $379 million. The fall in revenue was caused by the downturn in the company’s business segments except its microcontroller business.
Microcontroller business generated revenues of $226 million, down 25% year over year but up 3% sequentially. 8-bit microcontroller declined 7% sequentially and 35% year over year. 32-bit microcontrollers increased 33% sequentially and 11% year over year.
Even though Atmel has globally established itself in the microcontroller business, it operates in an intensely competitive market. The company’s primary competitors include big players such as LSI Corporation (LSI) and Semiconductor Manufacturing International Corp. (SMI). LSI recently launched its latest Syncro MX-B Rack Boot Appliance to enhance the potential of the boot drives. Hence, the company has to go through rapid technological changes, evolving standards which may turn out to be costly.
The current Zacks Consensus Estimates for Atmel are 4 cents and 19 cents for fourth quarter of 2012 and for 2012, respectively. As the current macroeconomic conditions continue to be challenging, the company continues to have a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Nevertheless, we maintain a ‘Neutral’ recommendation on the stock for the long run.
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