Microchip Technology Incorporated (MCHP) reported net revenues of $374.5 million in the first quarter of fiscal 2012, down 1.4% sequentially but up 4.9% year-over-year. The results were in-line with the preliminary results released by the company in July.
Management stated that the company saw broadbased weakness in business due to a number of factors. The automotive business was down significantly from the March 2011 quarter due to lower automotive production activities including supply issues from other manufacturers associated with the earthquake in Japan.
The company also witnessed inventory correction in the June quarter. Microchip stated that some of the revenue upside that the company saw in the March quarter was the result of customers being cautious and accelerating purchasing activities to minimize supply chain disruptions.
In addition, consumer business was soft due to weak global economic conditions high unemployment, high oil prices and the resulting low consumer confidence. The computing business was also weaker-than-management’s expectations as the company saw reduced purchases by multiple large customers in the sector.
Quarter in Detail
In terms of product t mix, revenues from microcontrollers were down 2.0% sequentially but up and 4.3% year-over-year. 8-bit micro controller business was up from the year-ago quarter. 16-bit micro controller business was down 3.1% sequentially but up 43% year over year. Microchip shipped 44,000 development tools in the quarter. 32-bit microcontrollers were up 18.7% sequentially and up 108.5% year over year.
The Analog business was up 2.4% year-over-year and down 7.0% sequentially. Memory business was up 0.6% sequentially.
Microchip acquired Silicon Storage Technology (SST) in 2010. Excluding stock-based compensation expense and one-time items, gross margins came in at 59.5%, down from 60.3% in the year-ago quarter. Operating margin came in at 34.5%, down from 35.8% in the year-ago quarter.
Including the above mentioned items, Microchip generated a gross margin of 58.7%. Operating margin came in at 31.2%.
Net income of $99.3 million was down 24% sequentially but up 8.1% year over year. Earnings per share came in at $0.49 per share, missing the Zacks Consensus Estimate by a penny.
Microchip ended the quarter with cash and cash equivalents of $1.5 billion, down from $1.2 billion at the end of the previous quarter.
Quarter Ahead
Going forward, management expects net sales to be down from low to mid-single digit percentage. Gross margin is projected around 59.3% – 59.7%. Operating margin is projected between 33.8% – 34.7%. Earnings per share are projected between 44 and 48 cents. Excluding special items and stock based compensation expenses, earnings per share are projected between 50 cents and 54 cents.
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