Microchip Technology (MCHP) Bumps Q3 Outlook Higher

Microchip Technology Incorporated (Nasdaq: MCHP) improved the range of its prior guidance for non-GAAP net sales and non-GAAP earnings per share for its fiscal third quarter of 2017 ending December 31, 2016. Microchip previously provided guidance on November 7, 2016 for consolidated non-GAAP net sales to be flat to down 6% with a mid-point of down 3%. Microchip now expects consolidated non-GAAP net sales to be down 1% to 4% with a mid-point of down 2.5% and non-GAAP earnings per share to be between 87 cents and 94 cents per share. The original guidance for non-GAAP earnings per share was between 85 cents and 95 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 Q3 revenue of $846.8 million.

“Our business through the first eight weeks of the December 2016 quarter is tracking modestly above our November 7, 2016 guidance,” said Steve Sanghi, Microchip’s CEO. “Furthermore, 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 now closed which we expect to drive significant gross margin benefits after the higher cost inventory from that factory is sold through and our lower costs from our higher volume factories are realized. The integration of Atmel continues to progress as we approach a major milestone of integrating business systems on January 1, 2017.”

“With the continued execution of our integration activities and operational improvements for our business we are on track to realize our long term business model of 33% non-GAAP operating income by the fourth quarter of fiscal 2018,” concluded Mr. Sanghi.

There will be no conference call associated with this press release. Microchip’s CEO, Steve Sanghi, is presenting at the Credit Suisse 20th Annual TMT Conference tomorrow, Wednesday, November 30, 2016. A live webcast and replay of the presentation will be available at www.microchip.com.

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