Tuesday, semiconductor products maker Microchip Technology Inc. (MCHP) said it expects net sales and earnings for the second quarter to exceed the upper end of its prior guidance on buoyant demand for products.
Helped by good starting backlog, strong bookings and sales activities for the first two months of the quarter, Microchip now expects net sales for the quarter to be up 12% to 14% sequentially. GAAP and non-GAAP revenues are expected to be in the range of $216 to $220 million. GAAP earnings are expected to be to be about $0.20 to $0.22 per share, while non-GAAP earnings is projected at $0.26 - $0.27 per share.
Earlier, Chandler, Arizona-based Microchip had provided net sales guidance that was anticipated to grow 7% to 11% sequentially translating into revenue of $206 million - $214 million. GAAP earnings are estimated at about $0.18 to $0.20 per share, and non-GAAP earnings of about $0.23 to $0.26 per share.
Street analysts currently expect the company to post earnings of $0.20 per share on revenues of $211.27 million for the second quarter. Analysts' estimates typically exclude special items.
Gross margins are also expected to exceed the high end of prior guidance. Gross margins are now expected to be up about 350 to 400 basis points sequentially versus a prior guidance of up 250 to 350 basis points. GAAP gross margin is expected to range between 53.8% and 54.3% and non-GAAP gross margin between 54.9% and 55.4%.
Commenting on the revised outlook, Steve Sanghi, Microchip's President and chief executive officer said, "We are experiencing strong demand for all of our microcontroller and analog product families in the quarter with out 16-bit microcontrollers providing the highest sequential growth. Geographically, we are seeing strong demand in Asia and the Americas. Europe is unseasonably strong with revenue in the summer quarter being sequentially up for the first time in several years."
"We also experienced the strongest August bookings in our company's history, and consequently we are seeing strong backlog starting to build for our fiscal third quarter. We now expect inventory on our balance sheet to drop by an additional 5 days, to approximately 103 days in the second fiscal quarter ending September 30, 2009. Therefore, we are accelerating the capacity ramps in all our manufacturing facilities, " added Sanghi.
In the first quarter, Microchip's profit plunged on a significant decline in sales and margins. GAAP net income was $27.4 million or $0.15 per share, compared to $75.7 million or $0.40 per share a year earlier. Non-GAAP net income was $35.0 million or $0.19 per share, compared to $82.6 million or $0.44 per share last year. Net sales fell 28% to $192.95 million from the prior year.
MCHP closed Tuesday's regular trading on the Nasdaq at $27.08, up $0.36 or 1.35%. After hours, the stock further gained $0.14 or 0.52%. In the past 52-week period, the stock has traded in the range of $16.23 - $32.37, with an average 3-month volume of 3.4 million shares.
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