Microchip Technology And Atmel The Right Match
Stephen Simpson, CFA
Stephen Simpson, CFA
Softer Markets And Weak Execution Are An Ugly Mix For Atmel
Stephen Simpson, CFA
Stephen Simpson, CFA
Atmel Still Needs To Execute Better
Stephen Simpson, CFA
Stephen Simpson, CFA
Nov. 9, 2015, 6:20 PM
- Elliott, which has waged many successful activist campaigns involving tech companies, argues Dialog Semi's (OTC:DLGNF) planned cash/stock purchase of Atmel (NASDAQ:ATML) is too costly, and will yield little in cost savings. The firm controls 2.9% of Dialog's voting rights.
- Shareholder advisory firm ISS came out against the Atmel deal in late October. Dialog's shares have fallen sharply since the deal was announced in September, thanks partly to Dialog's weak Q3 report.
- Atmel has fallen to $7.30 after hours. Shares are now only $0.03 above where they traded prior to the deal announcement. Dialog shareholders vote on the deal on Nov. 19.
Oct. 30, 2015, 4:39 PM
- Bloomberg reports shareholder advisory firm ISS opposes Dialog Semi's (OTC:DLGNF) cash/stock deal to acquire Atmel (NASDAQ:ATML).
- The value of the stock portion of Dialog's planned payout to Atmel took a big hit earlier this week when Dialog plunged in response to a Q3 miss and weak Q4 guidance (Apple and various chip stocks also fell).
- Based on Dialog's Friday close in Frankfurt (occurred before the ISS news), the payout to Atmel shareholders is currently equal to $8.80/share - 21% above where Atmel last traded before the deal was announced, but 16% below the deal's $10.42/share value at the time of its announcement.
- Atmel fell 3.9% in regular trading, closing at $7.60.
- Earlier: Atmel falls on strong volume
Oct. 30, 2015, 2:19 PM
- After spending most of the day down modestly, Atmel (NASDAQ:ATML) has fallen sharply over the last 15 minutes on strong volume.
- No news has hit the wires yet. Atmel is 5 weeks removed from striking a cash/stock deal to be acquired by U.K. chipmaker Dialog Semi. Dialog posted a Q3 miss and issued soft guidance on Monday; Atmel delivered a revenue miss and soft guidance on Wednesday (several peers are in the same boat).
- Update (4:52PM ET): Shareholder advisory firm ISS has reportedly come out against the Dialog/Atmel deal.
Oct. 29, 2015, 12:29 PM
- Down on Monday following Dialog Semi's Q3 report and up yesterday in the wake of Apple's results/guidance, chip stocks are selling off again (SOXX -2.5%) after leading microcontroller vendor NXP (NXPI -18.2%) posted mixed Q3 results and (more importantly) guided for Q4 revenue to be down by a "low to upper-teens" % Q/Q. The Nasdaq is down 0.3%.
- Also: 1) NXP rival and fellow European chipmaker STMicroelectronics (STM -5.8%) slightly missed Q3 revenue estimates and has guided for Q4 revenue to be down 6% (+/- 3.5%) Q/Q. 2) Network processor vendor Cavium (CAVM -5%) issued light Q4 guidance, while blaming a distribution model change at its biggest data center customer. 3) Microcontroller maker Atmel (ATML -2.4%, set to be acquired by Dialog) missed Q3 revenue estimates and guided for Q4 revenue of $266M-$286M, below a $296.1M consensus.
- On the bright side, Apple-dependent Cirrus Logic (CRUS -5.7%) beat FQ2 EPS estimates (revenue was in-line) and provided solid FQ3 guidance, and fellow Apple/Samsung supplier InvenSense (INVN +14.3%) beat FQ2 estimates and issued in-line FQ3 guidance. Cirrus is nonetheless selling off; the earnings call (transcript) was generally upbeat, with management talking up FY16/FY17 growth opportunities related to smart codec and boosted amplifier sales.
- NXP merger partner Freescale (FSL -15.4%) is naturally seeing big losses. Other decliners include RF chipmakers Skyworks (SWKS -3.1%), Avago (AVGO -6%), and Qorvo (QRVO -2.6%), analog/mixed-signal chipmakers Texas Instruments (TXN -3%), ON Semi (ON -5.9%), MagnaChip (MX -6.8%), Fairchild (FCS -4.3%), Maxim (MXIM -3.1%), and IDT (IDTI -5.2%), and smart TV SoC vendor/STMicro rival Sigma Designs (SIGM -3.2%).
- Like NXP, Cirrus, and InvenSense, Skyworks, Avago, Qorvo, TI, and Fairchild are Apple suppliers. Fairchild and Maxim have recently benefited from M&A reports (I, II).
- Both NXP and STMicro reported seeing conditions deteriorate as Q3 progressed. NXP added lower-than-expected chip sell-through led to higher channel inventories, and STMicro stated "lower consumer spending in China is impacting the dynamics of the distribution channel in the region and the industry more globally, particularly in automotive." NXP has added 20M shares to its buyback in an attempt to soften the blow.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 28, 2015, 4:09 PM
- Atmel (NASDAQ:ATML): Q3 EPS of $0.08 in-line.
- Revenue of $286.53M (-23.5% Y/Y) misses by $6.42M.
Oct. 27, 2015, 5:35 PM
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Oct. 26, 2015, 10:52 AM
- Apple suppliers Qualcomm (QCOM -2.9%), Cirrus Logic (CRUS -10.1%), Skyworks (SWKS -5.1%), Qorvo (QRVO -5%), Avago (AVGO -4.2%), Broadcom (BRCM -2.3%), NXP (NXPI -3.5%), InvenSense (INVN -2.1%), Synaptics (SYNA -4.4%), and Analog Devices (ADI -2.7%) are selling off after iPhone/iPad power management IC supplier Dialog Semi (down 18.8% in Frankfurt) reported 18% Y/Y Q3 revenue growth and guided for annual Q4 growth to be in a range of -1% to +6%. Both the Q3 sales and Q4 guidance missed consensus estimates.
- NXP merger partner Freescale (FSL -2.9%) is also lower. As is Atmel (ATML -8.1%), which is set to merge with Dialog in a cash/stock deal. Atmel was originally due to receive over half its payout in Dialog shares, whose value has fallen considerably since the deal was announced in mid-September.
- Broadcom, set to merge with Avago, reports after the bell. Apple reports tomorrow, and Cirrus, NXP, and InvenSense on Wednesday. With the help of improving demand and ongoing M&A, chip stocks had bounced strongly from their August/September lows in recent weeks.
Oct. 26, 2015, 9:15 AM
Sep. 28, 2015, 12:42 PM
- Following a Reuters report noting its interest in fellow microcontroller vendor Atmel (ATML -0.1%), Cypress Semi (CY -3.4%) admits it submitted a buyout offer to Atmel's board, but adds the offer has expired and that Cypress "has withdrawn its interest" in a deal.
- Atmel, which has agreed to cash/stock deal with Dialog Semi (OTC:DLGNF), has returned its morning gains, while Cypress (though off its lows) remains down strongly. The Nasdaq is down 2.3%.
Sep. 28, 2015, 7:51 AM
- Atmel (NASDAQ:ATML) +6.6% premarket following a Reuters report that Cypress Semiconductor (NASDAQ:CY) is working on an offer to acquire the company that agreed earlier this month to sell itself to Dialog Semiconductor (OTC:DLGNF).
- CY has told ATML it believes its offer will be superior to Dialog's cash-and-stock deal, which was worth $4.6B when it was announced on Sept. 20, according to the report.
- A merger with ATML would be transformational for CY, which has a market capitalization of just $2.9B.
Sep. 21, 2015, 1:10 PM
- Dialog Semi (OTC:DLGNF) closed down 18.9% in Frankfurt after announcing a cash/stock deal to buy Atmel (NASDAQ:ATML). With today's selloff having cut the value of the stock component of the deal by nearly $1, Atmel is trading at $8.14, 22% below the deal's original estimated value of $10.42.
- With Dialog currently sporting a $3.2B market cap, the deal is more of a merger than an acquisition. Dialog, which supplies power management chips for the iPhone, iPad, and Apple Watch, argues Atmel will "complement its leadership position in Power Management ICs with a leading portfolio of proprietary and ARM-based Microcontrollers in addition to high performance ICs for Connectivity, Touch and Security," as well as provide new sales channels. (PR)
- Four firms have downgraded Atmel to neutral ratings. SA author Chris DeMuth Jr. thinks Texas Instruments, Analog Devices, or China Electronics (OTCPK:CEHD - previously rumored) could launch a rival bid, particularly given Dialog's selloff.
Sep. 21, 2015, 12:41 PM
Sep. 21, 2015, 9:19 AM
Sep. 20, 2015, 9:59 AM
- The U.K.'s Dialog Semiconductor (OTC:DLGNF) has agreed to buy U.S. rival Atmel (NASDAQ:ATML) for $4.6B in cash and stock.
- For each common share, Atmel stockholders will receive $4.65 in cash and 0.112 of a Dialog ADS, resulting in the "economic equivalent" of $10.42 per Atmel share.
- Dialog sees the transaction resulting in annual savings of $150M within two years, and expects the deal to be completed in first quarter of 2016.
- Previously: Atmel falls sharply following buyout report (Sep. 17 2015)
- Previously: China Electronics eyes Atmel acquisition (Sep. 17 2015)
Sep. 17, 2015, 2:26 PM
- Atmel (NASDAQ:ATML) has fallen to $7.60 following a Bloomberg report stating the microcontroller vendor is in preliminary talks to be sold to China Electronics for $8.50/share - just a 4% premium to Wednesday's close, and well below a 52-week high of $10.50.
- Shares popped in late August after Atmel disclosed CEO Steve Laub is delaying his retirement plans to help the company finish its strategic review, which comes amid a chip industry consolidation wave. With NXP and Microchip having struck deals this year to buy fellow microcontroller vendors Freescale and Micrel, there has been speculation Atmel could also get a bid from a peer.
- Update (5:38PM ET): Atmel closed down 9.2%.
Sep. 17, 2015, 7:14 AM
- China Electronics (OTCPK:CEHD) is in preliminary talks to acquire U.S.-based Atmel (NASDAQ:ATML) for about $8.50 a share, but negotiations are still underway, Bloomberg reports.
- Any sale would extend a record year for semiconductor deals, as chipmakers combine to counter slowing growth and rising costs.
- There's no guarantee a deal will get done, and talks may still fall apart.
- ATML +0.2% premarket
Atmel Corp. designs, develops and supplies microcontrollers, which are self-contained computers-on-a-chip. Its microcontrollers and related products are used in smartphones, tablet devices and other consumer and industrial electronics to provide touch sensing, security, wireless and... More
Industry: Semiconductor - Broad Line
Country: United States
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