Microchip Technology Inc. Earnings Cheat Sheet: Falling Revenue Breaks Streak of Four Consecutive Increases

S&P 500 (NYSE:SPY) component Microchip Technology Incorporated (NASDAQ:MCHP) reported its results for the second quarter. Microchip Technology develops and makes specialized semiconductor products used in a variety of embedded control applications.

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Microchip Technology Incorporated Earnings Cheat Sheet for the Second Quarter

Results: Net income for Microchip Technology Incorporated fell to $79.3 million (40 cents per share) vs. $103.1 million (54 cents per share) a year earlier. This is a decline of 23.1% from the year earlier quarter.

Revenue: Fell 10.9% to $340.6 million from the year earlier quarter.

Actual vs. Wall St. Expectations: MCHP reported adjusted net income of 46 cents per share. By that measure, the company beat the mean estimate of 44 cents per share. Analysts were expecting revenue of $343.4 million.

Quoting Management: “Our September quarter results are consistent with what others in the industry have reported. The poor economic conditions are impacting the broader semiconductor industry as can be seen from the earnings reports over the past few weeks,” said Steve Sanghi, President and CEO. “The overall macroeconomic environment is weak and the Christmas build season did not materialize as expected during the quarter. We saw broad-based weakness across all sales channels in all geographies.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the first quarter, net income rose 10.9% from the year earlier, while the figure increased 65.7% in the fourth quarter of the last fiscal year, 45.2% in the third quarter of the last fiscal year and more than twofold in the second quarter of the last fiscal year.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 68.7%.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 49 cents versus a mean estimate of net income of 50 cents per share.

The company’s cost of sales fell 7.4% from a year earlier to $145.6 million. Last quarter, cost of sales was 42.8% or revenue versus 41.1% a year earlier.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next quarter performance. The average estimate for the third quarter is now 42 cents per share, down from 49 cents. For the fiscal year, the average estimate has moved down from $1.98 a share to $1.80 over the last thirty days.

Competitors to Watch: Texas Instruments Inc. (NYSE:TXN), Analog Devices, Inc. (NYSE:ADI), ON Semiconductor Corp. (NASDAQ:ONNN), Atmel Corporation (NASDAQ:ATML), Linear Technology Corp. (NASDAQ:LLTC), IXYS Corporation (NASDAQ:IXYS), Semtech Corporation (NASDAQ:SMTC), STMicroelectronics N.V. (NYSE:STM), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Intel Corporation (NASDAQ:INTC).

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(Source: Xignite Financials)