) reported a net income of $43.0 million or 10 cents per share in
the third quarter of 2012 compared to a net income of $37.4
million or 8 cents per share in the second quarter of 2012 and a
net income of $124.0 million or 26 cents per share in the third
quarter of 2011. The reported earnings were ahead of the Zacks
Consensus Estimate of 5 cents per share.
The company reported net sales of $361 million in the third
quarter of 2012, down 24.7% year over year and 2% sequentially.
Net sales in the quarter were within management's previously
provided guidance range of $357 million - $379 million.
The fall in revenue was caused by the downturn in the
company's business segments except its microcontroller
Microcontroller business generated revenues of $226 million,
down 25% year over year but up 3% sequentially. 8-bit
microcontroller declined 7% sequentially and 35% year over year.
32-bit microcontrollers increased 33% sequentially and 11% year
The Non-Volatile Memory segment generated revenues of $44
million, down 7% sequentially and 33% year over year. The
sequential decline in the business was due to the weak pricing
In the RF and Automotive segment, revenue fell 9% sequentially
and 17% year over year to $43 million. Atmel saw a downturn in
the product ranges owing to the slow European automakers'
trends during the quarter.
The ASIC business segment generated revenues of $48 million,
declined 11% sequentially and 21% year over year. The fall in the
revenue was particularly due to the delay in the government
On a geographical basis, Asia accounted for 62% of total
business. Europe, the Middle East and Africa accounted for 23%
while the Americas contributed 15% to the total
Gross margin (excluding one-time items) decreased to 43.7%
from 44.6% in the previous quarter, primarily due to the low
revenue generated in the ASIC business segment and the negative
impact from the company's contract with the European foundry
partners. However, reported gross margin was down from 50.4% in
the third quarter of 2011. Operating margin came in at 12.7%, up
from 11.7% in the previous quarter.
Balance Sheet and Cash Flows
The company ended the quarter with cash and cash equivalents
of $287.0 million, up from $240.9 million at the end of the
previous quarter, driven by the high net income earned from the
sales of serial flash business.
Atmel generated $53.6 million in cash from operations in the
third quarter, down from $61.1 in the prior year period. The
company incurred $16 million in capital expenditures.
The company bought-back a total of 3.8 million shares at an
average price of $5.98 per share during the third quarter of
Going forward, Atmel anticipates that the revenues will be
within the range of $328 million and $352 million in the fourth
quarter of 2012, down 6% to up 1% sequentially. The revenue in
the quarter is likely to be positively influenced by the
company's microcontroller business offsetting the decline in the
Gross margin is projected between 41.6% - 43.6% in the fourth
quarter of 2012. Operating expenses are expected to be
nearly $110 million. Capital expenditures are likely to be nearly
$5 million to $10 million.
Even though Atmel has globally established itself in the
microcontroller business, it operates in an intensely competitive
market. The industry is marked by rapid technological changes,
evolving standards, short product life cycles and decreasing
prices as competition increases. The company's primary
competitors include big players such as
Texas Instruments Inc.
The company carries a Zacks #3 Rank, which translates into a
short-term 'Hold' rating.
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