Atmel Corporation
(ATML) reported earnings per share of 4 cents in the second quarter
of 2012, in line with the Zacks Consensus Estimate. On a reported
basis, the company posted break-even earnings in the second
quarter, down from 5 cents per share in the previous quarter and 20
cents a share in the year-ago quarter.
Net income came in at $0.8 million, including a pre-tax charge
of $14.4 million, primarily related to restructuring activities in
Europe, down from $20.4 million in the previous quarter and $90.9
million in the second quarter of 2011.
Revenues
The company reported net sales of $368.2 million in the second
quarter of 2012, down 23% year over year and but up 3%
sequentially. Net sales in the quarter were in line with
management's guidance of sequential revenue growth of 2% -
6%.
Atmel saw an improvement in revenue across most business
segments in the quarter including a recovery in core
Microcontroller business.
Microcontrollers business generated revenues of $220 million,
down 27% year over year but up 1% sequentially. 8-bit
microcontroller grew 4% sequentially but plunged 29% year over
year. 32-bit microcontrollers decreased 7% sequentially and 21%
year over year.
The Non-Volatile Memory segment generated revenues of $47
million, down 1% sequentially and 34% year over year. The
sequential decline in the memory business was a result of older
legacy terminal flash products approaching the end of their product
life.
In the RF and Automotive segment, revenue improved 9%
sequentially but fell 10% year over year to $48 million. Atmel saw
a healthy pickup in both high voltage and product lines during the
quarter. The non-automotive portion of the business, including a
legacy foundry business, also grew in the second quarter.
The ASIC business segment generated revenues of $53 million, up
9% sequentially but down 1% year over year, aided by higher
revenues in the aerospace and custom parts for medical and
point-of-sale applications.
On a geographical basis, Asia accounted for 54% of total
business. Europe, Middle East and Africa accounted for 28% of total
while the Americas contributed 18% to the total.
Margins
Gross margin (excluding one-time items) increased to 44.6% from
43.2% in the previous quarter, primarily due to higher factory
utilization as a result of a sequential increase in business
levels. However, reported gross margin was down from 52.3% in the
second quarter of 2011. Operating margin came in at 11.6%, up from
9.9% in the previous quarter.
Balance Sheet and Cash Flows
The company ended the quarter with cash and cash equivalents of
$240.9 million, down from $288.3 million at the end of the previous
quarter. The decrease was due to share repurchase activity in the
quarter.
During the second quarter, Atmel repurchased 6.1 million shares
for $44.0 million. Atmel generated $7.9 million in cash from
operations in the second quarter, significantly down from $61 in
the prior quarter primarily due to unfavorable timing of new
product ramps that affected linearity of shipments toward the end
of the quarter. The company incurred $9 million in capital
expenditures.
Outlook
Management stated although maXTouch business was soft in the
quarter, new design wins continue to be robust. Hence, management
does not expect to achieve its previous forecast of maXTouch
business of over $335 million.
The company now expects the company's business to be 10% to 15%
lower than the previous forecast as lower handset sales at its
largest handset customer are not being sufficiently compensated by
maXTouch sales to other customers.
Nevertheless, Atmel expects that the anticipated launch of
Windows 8 and growth in new markets should drive its maXTouch
business in both the third and fourth quarter of the
year.
Management continues to have limited visibility going ahead in
2012 due to the economic situation in Europe and recent slowdown in
Asia.
Going forward, Atmel expects revenues between $357 million and
$379 million in the third quarter of 2012, due to lower revenue
from ASIC business, which should recover in the fourth
quarter.
Gross margin is projected between 43.5% - 44.5% in the third
quarter of 2012.
ATMEL CORP (ATML): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research