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Components | October 19, 2011

Microchip cautious on 2Q net sales

Microchip Technology expects its net sales for its second quarter of fiscal 2012 ending September 30, 2011, to be down about 9.1% sequentially and be about $340.6 million.
On August 4, 2011, Microchip provided guidance of net sales to be down sequentially by 1% to 6% (or $352.0 to $370.8 million). Microchip also announced that second quarter fiscal 2012 GAAP earnings per share is expected to be approximately 38 to 40 cents and non-GAAP earnings per share is expected to be approximately 45 to 47 cents. On August 4, 2011, Microchip provided guidance of GAAP EPS of 44 to 48 cents and non-GAAP EPS of 50 to 54 cents for the second quarter of fiscal 2012.

“Our net sales activity in the September quarter did not progress as we originally expected,” said Steve Sanghi, Microchip’s President and CEO. “Entering the September quarter we anticipated that business conditions would continue to be impacted by weak, broad-based demand conditions, but would begin to improve towards the latter part of the quarter from the seasonal Christmas builds in Asia. Instead we experienced incrementally stronger headwinds and saw no seasonal Christmas build, which in turn adversely impacted all of our product lines and sales channels. The overall global economic outlook continues to be poor and is adversely impacting our business as well as the rest of the semiconductor industry.”

“While we are disappointed with our September quarter results, we continue to see excellent design win traction in our microcontroller and analog product lines and maintain a strong competitive position. Net sales from our 32-bit microcontroller business was up 10.4% sequentially, and our licensing business was up 6.4% sequentially, both setting new records in the September quarter. Additionally we shipped our 10 billionth microcontroller during the quarter,” added Mr. Sanghi.

Mr. Sanghi concluded, “We will provide revenue and full financial guidance for the December 2011 quarter during our November 3, 2011, financial results conference call.”

“Many investors have seen coverage of the terrible floods that are affecting Thailand, mainly in areas north of Bangkok,” said Ganesh Moorthy, Microchip’s Chief Operating Officer. “Our two facilities are located almost 50 miles east of Bangkok, and are running normally and meeting customer demand for our products. While our supply chain in Thailand has been stable, we have taken steps to secure additional inventory to support production needs, as well as adding alternative suppliers to mitigate our supply risk. We are monitoring the situation for the safety of all our employees, while ensuring that our factories in Thailand continue to operate normally to support our customers.”

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