(RTTNews) -  Semiconductor products maker Microchip Technology Inc. (MCHP: News ) said Wednesday its second quarter profit declined 41.3% from last year, hurt by a drop in net sales partially offset by lower operating expenses. Looking ahead, the company provided outlook for the third quarter and calendar year 2010, both indicated to come in above Street estimates.

The Chandler, Arizona-based company posted GAAP net income of $44.5 million for the second quarter, down 41.3% from $75.7 million in the prior year quarter. Earnings per share dropped to $0.24 from $0.40 in the previous year quarter.

Excluding items, non-GAAP net income dropped to $53.2 million or $0.29 per share from $83.5 million or $0.45 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share for the second quarter. Analysts' estimates typically exclude special items.

Second quarter net sales declined 16% to $226.7 million from $269.7 million in the same quarter last year. Thirteen analysts had a consensus revenue estimate of $224.11 million for the second quarter.

Microchip expected to report GAAP earnings of $0.18 to $0.20 per share, non-GAAP earnings of $0.23 to $0.26 per share, and revenue of $206 million to $214 million for the second quarter.

Total operating expenses for the second quarter eased to $70.6 million from $77.0 million in the prior year quarter.

Further, the company said that its board has raised its quarterly cash dividend to $0.34 per share from $0.339 per share, payable on December 2, to stockholders of record on November 18.
Microchip's board authorized a stock buy back of up to 10.0 million shares in December 2007. At March 31, about 2.5 million shares remained available for purchase under this program.

During the quarter, Microchip shipped 38,086 development systems, a new record that demonstrates the continued strong interest in Microchip's products in the face of a tough economy. The total cumulative number of development systems shipped now stands at 843,010.

For the first half of fiscal 2010, Microchip reported net income of $71.9 million or $0.39 per share, down from $151.3 million or $0.80 per share in the previous year period.

On a non-GAAP basis, net income dropped to $88.2 million or $0.48 per share from $166.1 million or $0.88 per share in the prior year period.

Net sales for the six-month period decreased to $419.6 million from $537.9 million in the year-ago period.

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