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Microchip Technology Disappoints on 1Q16 Earnings

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Microchip Technology Disappoints on 1Q16 Earnings PART 1 OF 6

Microchip Revenues Remain Flat Year-over-Year

1Q16 revenues

On August 3, 2015, Microchip (MCHP) announced its 1Q16 earnings and reported revenues of $534 million, a 0.94% increase year-over-year (or YoY) compared to revenues of $528.9 million in 1Q15. Generally accepted accounting principles (or GAAP) net income for 1Q16 was $130.7 million, and earnings per share (or EPS) accounted to $0.60 per diluted share. This was a 45.3% YoY increase compared to net income of $89.9 million and EPS of $0.40 in 1Q15.

Non-GAAP net income for 1Q16 was $148.9 million and its EPS was $0.69, a decline of 1.8% from non-GAAP income of $151.6 million and its EPS of $0.68. The firm declared a quarterly cash dividend of $0.35 per share payable on September 25, 2015. In comparison, peer companies Texas Instruments (TXN) and Analog Devices (ADI) reported revenues of $3.2 billion and $863 million in the last quarter, respectively.

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Steve Sanghi, president and CEO of Microchip, stated, “Our June quarter revenue was below our guidance but was consistent with industry conditions as evidenced by what others in the semiconductor industry have reported. The June quarter started out well, but the negative effects of a very weak economy in China and challenges in Europe, led by a very weak Euro caused us to finish the quarter below our revenue guidance provided on May 7, 2015.”

Microcontroller revenue increases

In 1Q16, microcontroller revenue increased 1.3% YoY. Microchip’s chief operating officer, Ganesh Moorthy, stated, “In the aggregate over the last four rolling quarters, our microcontroller business was up 8% over the prior four quarters. We are continuing to deliver innovative new 8-bit, 16-bit and 32-bit microcontrollers that we believe will enable us to continue to gain market share. Our analog business was down 0.6% in the June quarter compared to the year ago quarter and experienced the same weakness we saw in our microcontroller business.”

Microchip comprises 0.05% of the iShares Core S&P 500 ETF (IVV) and 0.25% of the Technology Select Sector SPDR ETF (XLK), respectively.

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