Microchip posts weak fiscal Q3, outlook brighter

LONDON – Microcontroller chip company Microchip Technology Inc. has reported that its fiscal third-quarter profit dropped 23.5 percent year-on-year to $77.5 million as net sales slipped back to $329.2 million, down 3.4 percent sequentially and down 10.5 percent year-over-year. Despite the sharp drop in profit it was Microchip's 85th consecutive profitable quarter.

The lower revenues were attributed to a drawing down on inventory and that Microchip (Chandler, Ariz.) had experienced weak demand earlier than its peers. Weakness in the PC and hard-disk drive markets partly due to flooding in Thailand also had an impact. However, the results were in-line with previous guidance and the company's CEO predicts increased sales in the fourth fiscal quarter, the first calendar quarter of 2012.

Microchip is one of few microcontroller vendors that has not turned to the ARM Cortex-M architecture.

"Our December quarter results were consistent with the guidance we provided on November 3, 2011 and marked our 85th consecutive quarter of profitability," said Steve Sanghi, President and CEO, in a statement. "Microchip entered this industry down cycle about one quarter earlier than most of our industry peers, and we believe that our December quarter results combined with our March quarter guidance confirms that we also expect to exit this cycle a quarter earlier than most."

Microchip said progress on the 32-bit microcontroller front where sales were up 33.7 percent on a sequential basis and had more than doubled from the year-ago quarter. Analog product sales grew sequentially while many analog chip companies were seeing declining sales and the company's embedded flash memory licensing business posted a record quarter.

Sanghi said he expected the March 2012 quarter to be up by between 1 and 5 percent, equivalent to between $332.4 million and $345.6 million.


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