Microchip Technology Inc. (MCHP) said Thursday after the markets closed its first quarter profit fell 63% from last year, as sales dropped and margins deteriorated. However, the company's quarterly earnings per share came in above analysts' as well as its own expectations. At the same time, the company forecast second quarter sales and earnings above analysts' current consensus estimates.
The Chandler, Arizona-based chipmaker reported GAAP net income for the first quarter of $27.4 million or $0.15 per share, compared to $75.7 million or $0.40 per share for the year-ago quarter.
Excluding gain or loss on trading securities, share-based compensation and other items, non-GAAP net income for the first quarter was $35.0 million or $0.19 per share, compared to $82.6 million or $0.44 per share in the prior year quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.13 per share for the first quarter.
GAAP gross margin for the quarter fell to 50.0% from 61.0 a year ago, while non-GAAP gross margin slipped to 51.4% from 61.6% last year.
GAAP operating margin for the quarter declined to 16.2% from 32.3% a year earlier, while non-GAAP operating margin dropped to 22.1% from 35.2% last year.
Net sales for the first quarter fell 28% to $192.95 million from $268.17 million in the same quarter last year. Eleven analysts had a consensus revenue estimate of $189.81 million for the first quarter.
"During the June quarter we saw a steady improvement in the overall business environment that enabled us to exceed our revenue, gross margin, earnings per share and inventory guidance we provided in early June," said Steve Sanghi, Microchip's President and CEO.
In June, the company said it expected GAAP earnings of $0.12 to $0.13 per share, non-GAAP earnings of $0.17 to $0.18 per share and sequential revenue growth of 8% to 10% for the first quarter.
The company said its microcontroller businesses performed well in the first quarter and revenues were up 11.9% sequentially. Its 16-bit microcontroller revenues grew 15.7% sequentially and 33.3% year-over-year. The company shipped a record 35,608 development systems during the quarter.
Microchip declared a quarterly cash dividend of 33.9 cents per share, payable on September 3 to shareholders of record on August 20.
Looking forward to the second quarter, the company said it expects revenue of $206 million to $214 million, GAAP earnings of $0.18 to $0.20 per share and non-GAAP earnings of $0.23 to $0.26 per share. Analysts currently expect the company to earn $0.17 per share on revenue of $199.96 million for the second quarter.
GAAP gross margin for the second quarter is expected to be 52.8% to 53.8% and non-GAAP gross margins for the quarter is expected to be 54.0% to 55.0%.
"Despite the continued weakness in the global economy, we are seeing improving trends in Microchip's business and our overall visibility. We expect revenue for the September quarter to be up between 7% and 11% sequentially," CEO Sanghi said.
Microchip shares, which have traded in a range of $16.23 to $34.19 over the past year, closed Thursday's regular trading session at $26.72, down 70 cents or 2.55% but gained 13 cents in after hours trading.
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