MCHP ($34-$33-$34) Meets ,increase in turns orders and slowing of pushouts and cancellations.
Thursday July 19, 4:38 pm Eastern Time
Press Release
Microchip Technology Reports First Quarter Fiscal 2002 Results
CHANDLER, Ariz.--(BUSINESS WIRE)--July 19, 2001--Microchip Technology Inc. (Nasdaq: MCHP - news) reported net sales and earnings for the first fiscal quarter ended June 30, 2001.
Net sales for the quarter were $138.9 million, a decrease of 9 percent from sales of $153.4 million in the immediately preceding quarter. Diluted earnings per share for the quarter were 16 cents on 137.6 million average shares outstanding, down approximately 17 percent from diluted earnings per share of 19 cents (before special charges) in the immediately preceding quarter.
Net sales for the quarter ended June 30, 2001 were down 22 percent from sales of $177.7 million in the prior year's first quarter. Diluted earnings per share for the first quarter of fiscal 2002 decreased approximately 49 percent from diluted earnings per share of 31 cents in the prior year's first quarter.
``I am very encouraged by our performance in the June quarter, particularly when considering the conditions faced by the semiconductor industry and the overall economy,'' said Steve Sanghi, Microchip's president and chief executive officer.
``Despite these challenging times in the industry and economy, our first quarter results are in line with the original guidance provided during our fourth quarter and fiscal year 2001 earnings release in April, and reaffirmed in our June 14, 2001 Business Update.
``We have taken the actions to right-size our business. With these actions, our gross margins are approximately 50 percent, and operating profits are over 20 percent, significantly better than the performance of many of our competitors.
``Our balance sheet position remains strong, with inventories maintained at the same levels as last quarter, reflecting our capacity actions, and growing cash balances while at the same time significantly reducing our accounts payable.
``Our overall performance reflects our diversified customer base, design win activity, a high proprietary content in our product portfolio, and our proactive response to market and industry changes.
``As indicated in our June 14 business update, we believe that the inventory correction has almost run its course, based on an increase in turns orders and slowing of pushouts and cancellations. While we are confident that our high rate of design-in activity will position us well to return to a pattern of growth, visibility continues to be low.
``We plan to maintain our stance of cautious optimism for the near term, and will continue to monitor industry and market conditions very closely. We are pleased with the current positioning of Microchip, and remain optimistic on our long-term outlook.''
Microchip's First Quarter Highlights
Microchip recently unveiled architecture details for its proprietary 16-bit dsPIC(TM) digital signal controllers. The dsPIC core is a 16-bit (data) non-pipelined modified Harvard RISC machine that combines the control advantages of a high-performance 16-bit microcontroller with the high computation speed of a fully implemented digital signal processor (DSP) to produce a tightly coupled, single-chip single-instruction stream solution for embedded systems designs. The electronics industry has recognized Microchip's technology leadership here as the dsPIC architecture was the cover story for the June 4 issue of Electronic Design, one of the most widely read and respected trade publications among design engineers.
In June, Microchip launched a family of advanced 8-bit configurable analog microcontrollers for various measurement and control applications. Providing unmatched levels of flexibility and integration with high-performance analog and digital peripherals, the PIC16C781 and PIC16C782 microcontrollers form a complete system-on-a-chip in a small 20-pin package.
Microchip in June introduced its first proprietary products for infrared wireless communication -- the MCP2120 Encoder/Decoder and the MCP2150 Infrared Communications Controller supporting the IrDA® standard. The MCP2150 is the only low pin count communication controller on the market that supports both the IrDA standard protocol stack and bit encoding/decoding.
At the Embedded Systems Conference in April, Microchip announced the PIC18F0x0 Flash microcontrollers that pack industry-leading performance of 10 MIPS, 4K bytes of program memory, 256 bytes of user RAM and 64 bytes of EEPROM data memory into a small 8-pin package. These microcontrollers feature Microchip's In-Circuit Serial Programming(TM) (ICSP(TM)) technology, available on our broad Flash microcontroller portfolio, which allows the devices to be programmed after being placed in a circuit board.
The June issue cover of Wireless Design & Development Asia featured Microchip's 24LC09, the world's first serial EEPROM supporting the Advanced Communications Riser Special Interest Group (ACR SIG) specification, providing the enumeration memory for next-generation PC Audio Modem Riser cards.
In May, Microchip announced an alliance agreement with Oki Electric Industry Co. Ltd., a Japanese semiconductor manufacturer located in Tokyo, naming them a distributor of Microchip's PIC16C5x and PIC16Cxx families of 8-bit microcontrollers.
Microchip expanded its offering of proprietary operational amplifiers (op amps) with the MCP61x family of unity gain stable op amps with low offset voltage. The devices are single supply op amps offering a gain bandwidth product of 190 MHz with a typical operating current of 20 uA.
Microchip's first ROMless microcontrollers, the PIC18C601 and PIC8C801, began volume production during the first quarter of fiscal 2002. We have already won several designs based on these devices. The first is a leading short message service (SMS) platform that operates on standard telephone lines and uses the external memory capability to accommodate multiple language options.
Microchip shipped approximately 6,000 development systems during the quarter ended June 30, 2001, bringing our cumulative shipments to approximately 209,000. This represents one of the largest user bases of development tools in the semiconductor industry, and continues to be a positive indicator of new customer activity.
Q2 FY2002 Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Continuing uncertainty in the global semiconductor industry and low visibility make it very difficult to predict demand and other related matters. Therefore, Microchip will not provide guidance beyond the quarter ending Sept. 30, 2001.
Microchip will provide a mid-quarter update on Sept. 13, 2001. See ``Conference Call and Updates'' section below for details.
Revenue for the second fiscal quarter ending Sept. 30, 2001 is currently anticipated to be flat compared to first quarter, plus or minus 2 percent, or between $136 and $141 million.
Gross margins for the second fiscal quarter ending Sept. 30, 2001 are expected to be approximately 50 percent. Factors driving margins include the positive effects of capacity and cost reduction programs that were completed in the June quarter and that are expected to offset the pricing pressure on Serial EEPROM products. Generally, gross margins will fluctuate over time, driven primarily by the product mix of microcontrollers and related memory products, manufacturing yields, fixed cost absorption, wafer fab loading levels and competitive and economic conditions.
Operating expenses for the second fiscal quarter ending Sept. 30, 2001 are expected to be between $40 and $41 million. Operating expenses fluctuate over time, primarily due to revenue and profit levels.
Included in operating expenses, Research and Development (R&D) for the second fiscal quarter ending Sept. 30, 2001 is expected to be approximately $20 million. We are maintaining our research and development initiatives in order to provide Microchip with new manufacturing technologies and an increased product offering.
Depreciation expense for the fiscal quarter ending Sept. 30, 2001 is expected to be approximately $28 to $29 million.
The tax rate is expected to remain unchanged at approximately 27 percent.
Based on these assumptions, earnings per share for the September quarter is anticipated to be flat with first quarter, plus or minus 1 cent, or approximately 15-17 cents.
Capital expenditures for fiscal 2002 are expected to be approximately $55 million. We plan to invest in equipment to maintain, and selectively increase, capacity at our existing wafer fab and product test facilities. The level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
Cash flow is expected to remain positive during the September quarter and the balance of fiscal 2002, based on cash generated from operations and current projected capital expenditure levels. We expect to add approximately $30 million to our existing cash balances during the fiscal quarter ending Sept. 30, 2001, and approximately $100 million for the balance of the fiscal year ending March 31, 2002. |
