Microchip Technology (MCHP) Trims Q2 Outlook

September 6, 2016 4:18 PM EDT
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Microchip Technology Incorporated (Nasdaq: MCHP) narrowed the range of its prior guidance for non-GAAP net sales and earnings per share for its fiscal second quarter of 2017 ending September 30, 2016. Microchip previously provided guidance on August 8, 2016 for consolidated non-GAAP net sales to be flat to up 4% with a mid-point of up 2%. Microchip now expects consolidated non-GAAP net sales to be up between 1% and 3% with a mid-point unchanged at 2% and non-GAAP earnings per share to be between 85 cents and 89 cents per share. The original guidance for non-GAAP earning per share was between 83 cents and 91 cents per share. Due to Microchip's recent acquisition of Atmel and the related purchase accounting, Microchip is not able to provide GAAP guidance at this time.

*** The Street sees Q2 revenue of $861 million and EPS of $0.86.

"Our business through the first two months of the September 2017 quarter is tracking towards our August 8, 2016 guidance," said Steve Sanghi, Microchip's president and CEO. "The integration activities associated with our acquisitions of Atmel and Micrel continue to make significant progress. Micrel's 6-inch fab in San Jose is on schedule to close in October 2016. Each of Atmel's 8-bit microcontroller, 32-bit microcontroller, wireless and memory business units that have substantial overlap with Microchip's business units are now fully integrated and each one is running as one business unit under a Microchip Vice President, with common roadmaps and Microchip's pricing discipline."

"We have also implemented a strong operating expense discipline at Atmel with non-GAAP operating expenses for the Atmel business in the September quarter expected to be about 30% of net sales, down from over 40% of net sales at the close of the acquisition," concluded Mr. Sanghi.

There will be no conference call associated with this press release. Microchip's Chairman and CEO, Steve Sanghi, is presenting at the Citi 2016 Global Technology Conference tomorrow, Wednesday, September 7, 2016. A live webcast and replay of the presentation will be available at www.microchip.com.

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