Microchip Sees Q4 Adj. EPS To Be Near High End Of Guidance

(RTTNews) - Microchip Technology Inc. (MCHP), a provider of microcontroller, mixed-signal, analog and flash-IP solutions, announced that it has completed its acquisition of Atmel Corporation.

Steve Sanghi, Microchip's Chairman and CEO said, "The performance of Atmel since we engaged in discussions in August of 2015 has been disappointing We believe that the large drop in Atmel revenue in the March 2016 quarter is likely the result of an inventory correction in the distribution channel as distributors reduced inventory levels, overall weak business conditions, and concerns on the part of distributors surrounding the impact of the sale of Atmel to Microchip. We took some of this weakness into consideration in dropping the final acquisition price from our original offer."

Microchip also announced that it expects it net sales for fiscal fourth quarter ended March 31, 2016 to be an all-time record and between the mid-point and high end of the guidance of $552.0 million to $568.5 million it provided during its earning conference call on February 3, 2016. Microchip also expects its non-GAAP earnings per share to be near the high end of its February 3, 2016 guidance of $0.65 to $0.69 per share. Analysts polled by Thomson Reuters expect the company to report earnings of $0.67 per share and revenues of $560.26 million for the fourth-quarter. Analysts' estimates typically exclude special items.

Microchip also announced that Atmel's sales and earnings for the quarter ending March 31, 2016 are expected to be significantly lower than Atmel's December 31, 2015 quarterly results. Specifically, Atmel's net sales are expected to be in the range of $219 million to $221 million in its quarter ended March 31, 2016, down 15.8% at the mid-point from Atmel's net sales in the quarter ended December 31, 2015.

Based on sell-through revenue recognition, Atmel's March 31, 2016 quarter net sales are expected to be between $250 million to $253 million, down 6.1% at the mid-point from its net sales based on sell-through in the quarter ended December 31, 2015. s.

Microchip also announced that in consolidating Atmel's results, it expects to treat the mobile touch business of Atmel as an asset held for sale and will report the net profit/loss of this business below the operating line of Microchip's income statement.

For reference, for the quarter ending March 31, 2016, the net sales for Atmel's mobile touch business is expected to be about $6 million to $7 million on a GAAP revenue basis (sell-in revenue recognition in Asia) compared to $18 million in the December 2015 quarter.