Thursday, Microchip Technology Inc. (MCHP), a manufacturer of semiconductor equipments, reported a 5% drop in first quarter profit, while revenue rose marginally from the prior-year period. Additionally, the company issued second quarter outlook, which is above Street's current expectation.
The Chandler, Arizona-based company said first quarter net income dropped to $76.31 million from $80.29 million reported for the same period last year. However, earnings per share rose to $0.40 from $0.36 owing to lower number of shares outstanding in the just concluded period.
On a non-GAAP basis, earnings were $82.62 million or $0.44 per share, in comparison with $86.70 million or $0.39 per share in the previous year period. On average, 18 analysts polled by First Call/Thomson Financial expected earnings of $0.40 per share for the quarter.
Earnings per share results were in line with the chip maker's internal projections of $0.39-$0.41 per share on a GAAP basis and earnings of $0.43-$0.45 per share on a non-GAAP basis provided in April.
Net sales rose to $268.2 million from $264.1 million reported last year, falling short of analysts' consensus estimate of $270.32 million. Gross margin, on a non-GAAP basis, was 61.6% in the first quarter of 2009, compared to 60.6% in the previous year.
Microcontroller product revenues grew 3% sequentially to a record level, while 16-bit microcontroller revenues improved 5% sequentially and were up 60% over the same period a year ago. Analog product revenues grew 8.1% over the year ago quarter and memory revenues grew 2.7% sequentially.
Other income dropped to $6.54 million from $15.72 million, while operating expenses rose to $76.97 million from $73.53 million.
Additionally, Microchip said its Board of Directors declared a quarterly cash dividend of 33.8 cents per share on its common stock. The dividend is payable on August 21 to stockholders of record on August 7.
The company shipped 34,936 development tools in the first quarter. China was the strongest geography, with net sales up 18.2% sequentially. The company said it experienced no measurable adverse impact on its business from the earthquake in China, contrary to the concerns in the market.
Commenting on the results, Steve Sanghi, Microchip's President and CEO, said, "I am very proud of the results we achieved despite a very challenging business environment. Our microcontroller and analog products achieved record net sales levels in the June 2008 quarter. During the quarter we also achieved net sales growth in all major product lines of Microchip."
Looking ahead, the company noted that it continues to be cautious about the challenging global business environment including continued weakness in the U.S., the effects of a strong Euro and summer holidays in Europe, as well as the effects of high energy prices globally.
For the second quarter, earnings are expected to be about $0.44-$0.45 on a non-GAAP basis, excluding the effect of share-based compensation expense. The company expects second quarter earnings on a GAAP basis to range between $0.40 and $0.41 per share.
Analysts currently expect second quarter earnings in the range of $0.39-$0.43 per share with a consensus of $0.41 per share.
Second quarter net sales are anticipated to be flat to up 3% sequentially. The Street expects second quarter revenues of $270.32 million.
Last week, analysts at UBS upgraded the company's stock to "Buy" from "Neutral".
MCHP closed Thursday's regular trade at $30.15, down $1.25 or 3.98%, from the previous close, on 4.15 million shares. The stock added $1.35 in the extended trade. For the past year, the stock trended in the range of $26.22-$41.37.
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