Microchip Slashes Guidance - Analyst Blog
October 14 2011 - 8:30AM
Zacks
Microchip Technology Incorporated (MCHP)
recently revised its guidance for the second quarter of fiscal
2012. The company now expects sales to decline by approximately
9.1% sequentially to $340.6 million. Microchip had earlier guided
sales to decline by about 1% to 6% sequentially to $352.0
million–$370.8 million.
Microchip stated that sales activity in the September quarter
did not progress as expected. The company had earlier expected that
business conditions would be impacted by weak, broad-based demand
conditions in the September quarter but should improve towards the
latter part of the quarter from the seasonal Christmas builds in
Asia.
However, Microchip saw no seasonal Christmas build-up in the
latter part of the quarter, which in turn adversely impacted all
the product lines and sales channels. Moreover, management stated
that the overall global outlook continues to be weak and the
company’s business will be impacted further.
Nevertheless, Microchip continues to be positive on design win
traction in microcontroller and analog product lines. Net sales
from the 32-bit microcontroller business were up 10.4% sequentially
and licensing business was up 6.4% sequentially. The company also
shipped its 10 billionth microcontroller during the quarter.
Meanwhile, management stated that the floods in Bangkok have not
affected the company’s two facilities there. Both the facilities
are located almost 50 miles east of Bangkok and are running
normally and meeting customer demand. The company has taken steps
to procure additional inventory to feed production and add
alternative suppliers to mitigate supply risk.
The downgrade in guidance led to a 2.01% decline in share price
in after-hours trading to close at $34.60. In regular trading, the
shares gained 2.47%.
The global slowdown has led many companies in the semiconductor
universe to revise their outlook for the third quarter of calendar
2011, namely Altera Corp (ALTR) and
Xilinx, Inc. (XLNX).
ALTERA CORP (ALTR): Free Stock Analysis Report
MICROCHIP TECH (MCHP): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
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