Microchip Tech net sales up 6.3%

By SiliconIndia   |   Thursday, 24 October 2002, 07:00 Hrs
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CHANDLER: Microchip Technology (Nasdaq: MCHP) Thursday reported net sales of $169.7 million, an increase of 6.3 percent from sales of $159.7 million in the immediately preceding quarter, and an increase of 19.8 percent from sales of $141.7 million in the quarter ended Sept. 30, 2001.

Pro forma net income for the quarter was $35.2 million, or 17 cents per diluted share, up approximately 14% from pro forma net income of $31.0 million, or 15 cents per diluted share, in the immediately preceding quarter, and up approximately 51 percent from net income of $23.1 million, or 11 cents per diluted share, in the quarter ended Sept. 30, 2001.

The Pro forma net income excludes a $24.9 million tax-effected impairment charge associated with the company's writedown of Fab 3 in Puyallup, Wash. Pro forma net income in the previous quarter of $31.0 million excludes a $9.3 million in-process research and development charge associated with the company's acquisition of PowerSmart Inc. Reported net income for the second quarter of fiscal 2003, which includes the Fab 3 impairment charge, was $10.3 million, or $0.05 earnings per diluted share, the company announced in an official release.

"In an industry environment that remains extremely challenging, Microchip's performance in the September quarter can only be described as exceptional," said Steve Sanghi, Microchip's president and CEO. "Our overall performance was led by our microcontroller product line which posted a sequential revenue gain of approximately 7%, and year over year growth of approximately 22%. These results strongly evidence that we continue to gain market share."

"Our Analog and Serial EEPROM product lines each posted sequential revenue gains in the quarter, and also on a year over year basis, contributing to the overall performance of the company," Sanghi continued.

"Overall operating results reflect the strength in revenue performance, higher gross margins and improving operating margins. The growth in pro forma earnings per share of approximately 14% sequentially and approximately 51% year over year, and a pro forma operating margin of 27.2% in the current industry environment attest to the ability of Microchip to outperform the market," Sanghi said.

"As we look to the December quarter, the industry environment continues to be weak. We anticipate that our net sales will increase in the December quarter, driven by continuing strong design win activity. However, in the short term, we are somewhat cautious of any potential lingering effects that the U.S. West Coast port lockouts might have on the critical holiday season sales, as well as falling consumer confidence and threat of war. We anticipate sequential sales growth of between 2 percent and 5 percent in the December quarter, with earnings per share of approximately 17 to 18 cents per share," sanghi said.

"This would result in year over year sales growth of approximately 22% to 26%, and earnings per share growth of approximately 50% to 60% over the December 2001 quarter. Such results in the current semiconductor market environment would be, we believe, a remarkable achievement."

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