MICROCHIP TECHNOLOGY PROVIDES UPDATE ON MARCH 2020 QUARTER NET SALES AND THE BUSINESS ENVIRONMENT
GLOBENEWSWIRE 5:30 PM ET 4/8/2020
Symbol Last Price Change | MCHP | 79.52 | +6.18 (+8.43%) | | QUOTES AS OF 04:00:00 PM ET 04/08/2020 |
CHANDLER, Ariz., April 08, 2020 (GLOBE NEWSWIRE) -- – Microchip Technology Incorporated(MCHP), a leading provider of smart, connected and secure embedded control solutions, today provided an update on its expected March 2020 quarter net sales and the current business environment. Microchip announced that its net sales for the quarter ending March 31, 2020 is expected to be up about 3% sequentially versus its revised guidance provided on March 2, 2020 of about flat sequentially. Microchip also announced that it received record bookings for the March 2020 quarter and that its backlog for the June 2020 quarter is up about 9% from the March 2020 quarter backlog at the same point in time.
Microchip, however, believes that the strength in bookings may be a result of customer concerns about supply chain disruptions due to the COVID-19 virus. With economies around the world contracting rapidly, with millions of people getting laid off and with customer factory closures due to “shelter in place” ordinances in various countries, we believe that product demand is likely to weaken significantly.
Therefore, Microchip is proactively taking a series of actions to lower its cost structure. Microchip’s CEO, President and other executive staff members will take a 20% salary cut effective on April 20, 2020 while the rest of the non-factory employees in the company will take a 10% salary cut. The salary cuts will be in addition to the reduction of cash bonuses and other discretionary expenses. The cost reduction actions in our U.S. factories will vary with some employees taking salary cuts and others taking rotating time off depending on the factory loading levels for various locations. Cost reduction actions in our non-U.S. locations will depend on local law requirements including obtaining works council approval in certain jurisdictions and employee consent for salary cuts in other jurisdictions. The Microchip board of directors will also take a 20% cut in their cash compensation.
Microchip expects that its capital expenditures for fiscal 2021 ending March 31, 2021 will be reduced to about $50 million to $70 million, primarily for maintenance capital and to support new product introductions.
“While we see strong bookings and backlog right now, we also see a very high degree of uncertainly in our business due to the impact of the COVID-19 virus,” said Steve Sanghi, Microchip’s CEO. “With millions of job losses, customer factories shutting down and weakening economic activity, we are taking actions to reduce expenses and capital expenditures to prepare for these conditions.”
Microchip plans to complete its financial accounting processes and announce its March 2020 quarterly and year-end results on May 7, 2020. There will be no conference call associated with this press release. |
