Leading semiconductor manufacturer
Microchip Technology Inc.
) recently narrowed its second quarter fiscal 2014 guidance range
to better reflect an improving business environment and strong
earnings potential with increased bookings.
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Microchip now anticipates net sales to increase 3% to 5%
sequentially compared with earlier expectations of a 2% to 6%
sequential rise. Concurrent with the first quarter earnings
release, management had provided guidance for the second quarter
of fiscal 2014. GAAP gross margin was expected to be in the range
of 57.6% to 58.2%. GAAP net income was anticipated to be in the
range of $86.7 million to $95.5 million, with earnings per share
of 40 to 44 cents.
Microchip expected cash and investments to go up by approximately
$110 million to $130 million in the second quarter prior to
dividend payment. The company also expected to incur $27 million
in capital expenditure in the second quarter, bringing its tally
to about $90 million for fiscal 2014.
Stronger demand pull has also forced Microchip's management to
take immediate steps to align its inventory levels and thereby
avoid the risk of losing out on the opportunity. Workers have
been asked to ramp up production, while all employees are
directed to work full-time.
With better-than-expected bookings and expediting requests in its
business driven by strong demand and robust product designs,
Microchip anticipates continuing its bull run in the coming
quarters. We also remain encouraged by the strong results of the
company and its bullish guidance.
Microchip develops and manufactures microcontrollers, memory and
analog and interface products for embedded-control systems, which
are small, low-power computers designed to perform specific
tasks. Striking features like quality, performance, reliability,
ease of use, pricing and diversity of products have been the
forte of Microchip and has helped it to become one of the
better-positioned companies in the semiconductor universe.
Microchip presently has a Zacks Rank #2 (Buy). Other players in
the industry that are worth mentioning include
Monolithic Power Systems Inc.
MagnaChip Semiconductor Corporation
), each carrying a Zacks Rank #2 (Buy).