Microchip Technology Shares Tumble On Lower Q2 Sales Outlook

(RTTNews) - Shares of Microchip Technology Inc. (MCHP) tumbled more than 8 percent in extended trades Thursday after the semiconductor company lowered its sales outlook for the second quarter. The revised outlook is also below analysts' expectations.

Microchip Technology now forecasts net sales for the second quarter to be about $546.2 million, down from its prior guidance of $560 million to $575.9 million.

The revised sales outlook includes about $16.9 million from the company's recent acquisition of Taiwan-based ISSC Technologies Corp., while the prior outlook included $18 million from the ISSC acquisition.

On average, nine analysts polled by Thomson Reuters expect the company to report revenues of $568 million for the quarter.

Steve Sanghi, President and CEO of Microchip said, "We were disappointed with the level of business activity in the September quarter. The September quarter is usually a back-end weighted quarter because of a traditional weak August due to holidays in various parts of the world."

Sanghi added that the month of September is usually a strong month for the company's revenue after the summer holiday period. However, the September sales in the latest quarter did not materialize to the company's expectations.

Microchip Technology noted that the revenue miss was led by China, where the September quarter is traditionally the strongest. The company expects sales in China, excluding ISSC, to be down sequentially.

Looking ahead, Sanghi added, "We believe that we will be able to catch up on the capacity constraints during the December quarter and lead times should return to normal. The December quarter is seasonally our weakest quarter of the year. During typical industry corrections, we have returned to sequential revenue growth after two quarters and we currently expect the same this time."

Microchip Technology said it will provide its complete second-quarter operating results as well as its financial guidance for the third quarter during its financial results conference call on October 30, 2014.

MCHP closed Thursday's regular trading at $45.54, down $0.66 or 1.43 percent on a volume of 2.62 million shares. In after-hours, the stock further declined $3.79 or 8.32 percent to $41.75.