Earnings Preview: Microchip Technology

| About: Microchip Technology (MCHP)

Microchip Technology (NASDAQ:MCHP) is expected to report Q4 earnings after the market close on Thursday, May 7, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 11c for EPS and $172.06M for revenue, according to First Call. On March 10 Microchip reiterated its Q4 guidance. The company sees Q4 EPS of 13c to 15c on revenue of $173M. Thomas Weisel expects Microchip will report roughly in line with its internal revenue target of $173M. Weisel agrees with management’s assessment for the March quarter marking the trough in this latest downturn. The firm's industry checks point to a recovery starting in China's industrial segment.

Analyst Views

For the June quarter, Weisel is looking for a gradual increase in order rates, fab utilization and declining inventory days. The firms revenue and GAAP EPS estimates are $178.2M and 13c, respectively, while consensus is currently $178.7M and 14c. Weisel says recent acquisitions (R&E International, Hi-Tech Co, and Hampshire Co.) may increase product and market diversification. Weisel had upgraded Microchip shares on March 24 to an Overweight, boosting its target to $27, as they believe demand at Microchip's industrial customers has troughed and that market share loss concerns are unwarranted.

On the conference call investors will be looking for forward guidance, and comments on its recently increased stake in Supertex (NASDAQ:SUPX) which some are viewing as a harbinger of a takeout proposition.