Microchip Technology And Atmel The Right Match
Stephen Simpson, CFA
Stephen Simpson, CFA
Can More Be Squeezed From Microchip Technology In This Cycle?
Stephen Simpson, CFA
Stephen Simpson, CFA
Wed, May 4, 5:46 PM
Wed, May 4, 4:34 PM
Tue, May 3, 5:35 PM
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Tue, Apr. 19, 10:50 AM
- Amid a weak market in both PCs and handsets, Citigroup is expressing caution on semiconductor stocks that it says could decline 20% in the next few months, while still seeing glimmers of light.
- The automotive end market should be strongest, analyst Christopher Danely says, leading him to sector favorites Microchip Technology (MCHP +0.1%) and ON Semiconductor (ON +0.5%), along with Linear Technology (LLTC -0.6%) -- each of which has a heavy component of sales in automotive (in ON Semi's case, 33% of calendar-year sales).
- Ahead of today's earnings, Intel (INTC -0.1%) gets a note of caution. Citi's Jim Suva says PCs will decline 6% this year, worse than Intel's forecast.
- Meanwhile, strong Samsung shipments are good for Maxim Integrated Products (MXIM -1.1%), but an overall weak handset market plays to Apple's supply chain. Together, PCs and handsets make up some 50% of the semicondutor market.
- Now read Intel Looks Vulnerable »
Mon, Mar. 14, 2:00 PM
- The FTC and Germany's Federal Cartel Office have approved Microchip's (MCHP -1.2%) planned $3.4B acquisition of fellow microcontroller maker Atmel (ATML - unchanged).
- Korea' Fair Trade Commission is still reviewing the deal - Microchip "anticipates receiving approval" - and French regulators are reviewing "certain French ISS and defense business matters." Atmel shareholders are due to vote on the deal on April 1. Microchip previously said it expects the acquisition to close in calendar Q2.
Wed, Feb. 3, 6:03 PM
- Microchip (NASDAQ:MCHP) is guiding for FQ4 revenue of $552M-$568.6M (flat to up 3% Q/Q) and EPS of $0.65-$0.69 vs. a consensus of $567.1M and $0.66. Sales expectations were low on account of a chip inventory correction and soft guidance from other chip developers.
- Along with its results/guidance, Microchip announces it has appointed Ganesh Moorthy, the company's COO since 2009, its President.
- Remarks from CEO Steve Sanghi suggest Moorthy could get a bigger promotion in the future: "I will need more bandwidth to manage expanded operations worldwide with many more sites. Ganesh and I will jointly manage the worldwide consolidated enterprise of Microchip and Atmel ... Promoting a President from within is also a tribute to our strong succession planning and executive development program under which Microchip has not hired a Vice President level executive from outside since 2001."
- Sanghi on Microchip's guidance: "We believe that our business has stabilized and that the majority of the inventory correction is behind us. The March quarter will be impacted negatively by the Chinese New Year holidays in Asia but it is also the strongest quarter of the year for Microchip in Europe."
- MCHP +0.8% after hours to $42.65.
- Microchip's FQ3 results, earnings release
Wed, Feb. 3, 4:44 PM
- Microchip Technology (NASDAQ:MCHP) declares $0.359/share quarterly dividend, 0.1% increase from prior dividend of $0.3585.
- Forward yield 3.39%
- Payable March 7; for shareholders of record Feb. 22; ex-div Feb. 18.
Wed, Feb. 3, 4:21 PM
- Microchip Technology (NASDAQ:MCHP): FQ3 EPS of $0.64 beats by $0.02.
- Revenue of $552M (+3.0% Y/Y) in-line.
Tue, Feb. 2, 5:35 PM
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Tue, Jan. 19, 5:10 PM
- It's official: Microchip (NASDAQ:MCHP) is buying Atmel (NASDAQ:ATML) for $8.15/share in cash and stock, or an enterprise value of $3.4B. Atmel declared Microchip's offer superior to Dialog Semi's (OTC:DLGNF) last week, and Dialog later stated it wouldn't try to one-up Microchip. Dialog will get a $137.3M termination fee.
- The deal is expected to close in calendar Q2. Microchip will finance it via existing cash and credit facility borrowings. $170M/year in cost and revenue synergies are expected in FY19 (ends March '19).
- Microchip is paying $7/share in cash and $1.15/share in stock, with the amount of shares to be issued capped at 13M - if necessary due to a lower stock price, Microchip will up its cash payout. Concurrently, Microchip is upping its available buyback authorization by 3.6M shares to 15M, and plans to "repurchase the approximate number of shares it issues in the Atmel acquisition."
- Separately, Microchip says it expects to report FQ3 (calendar Q4) revenue of $552M and EPS of $0.62-$0.63, slightly above a consensus of $551.8M and $0.61. Gross margin guidance has been revised to 57.9% from 57.7%-57.9%. "Microchip's core business in the December quarter remained strong amidst the turbulence seen in the macro environment," says CEO Steve Sanghi. Official results arrive on Feb. 3.
- Earlier today: Morgan Stanley upgrades Microchip, praises Atmel deal
Tue, Jan. 19, 1:41 PM
- Believing the company's planned cash/stock acquisition of fellow microcontroller maker Atmel (ATML +0.6%) is a "game-changer," Morgan Stanley's Craig Hettenbach has upgraded Microchip (MCHP +1.8%) to Overweight, and set a $55 target.
- Hettenbach notes an Atmel acquisition would increase Microchip's exposure to 32-bit ARM microcontrollers (a fast-growing segment), and believes a deal would be accretive by 20%.
- Last week, Atmel declared Microchip's $8.15/share offer for the company superior to Dialog Semi's existing deal to buy Atmel. Soon after that, Dialog announced it wouldn't try to one-up Microchip's offer.
- Atmel, which trades $0.20 below Microchip's offer price, has been downgraded to Equal Weight by Hattenbach. Companies set to be acquired often get upgraded/downgraded to neutral ratings.
- Microchip and Atmel's calendar Q4 reports are due in the coming weeks. Atmel cut its Q4 sales guidance six days ago.
Thu, Jan. 14, 2:38 PM
- Dialog Semi (OTC:DLGNF) says it won't revise its existing offer to acquire Atmel (ATML - unchanged). That clears the way for Microchip (MCHP +2.8%) to acquire Atmel with its $8.15/share cash/stock bid, which Atmel recently declared to be superior to Dialog's offer.
- Atmel will pay Dialog a $137.3M termination fee if its deal with the U.K. chipmaker is terminated. Its shares currently trade at $7.97. Microchip is rallying on a day the Nasdaq is up 2.1%.
Wed, Jan. 13, 9:19 AM
- Atmel has notified Dialog Semi (OTC:DLGNF), with whom it agreed to a cash/stock deal in September, it intends to terminate its merger agreement with the company. However, Atmel's board "will consider in good faith any changes to the Dialog merger agreement or other arrangements that Dialog may offer in writing and would be legally binding upon Dialog by 5:00 PM California time on Tuesday, January 19, 2016." Atmel will pay a $137.3M termination fee if the Dialog deal is terminated.
- ATML +4.7% premarket to $8.04.
- Prior Atmel M&A coverage
Wed, Jan. 6, 6:10 PM
- Bloomberg reports Microchip (NASDAQ:MCHP) is reconsidering its offer to acquire Atmel (NASDAQ:ATML). Atmel has fallen to $8.00 after hours as a result.
- Reuters reported on Monday Microchip, believed to be the unnamed suitor Atmel has reported receiving a $9/share offer from, planned to submit a binding offer for Atmel by early next week. However, it added Microchip's due diligence process had taken longer than expected due to concerns about weakening business trends facing Atmel.
- If Microchip backed out, the coast would be clear for Dialog Semi (OTC:DLGNF) to acquire Atmel via the cash/stock deal that was struck in September.
Mon, Jan. 4, 4:15 PM
- Reuters reports Microchip (MCHP -1.3%) plans to submit a binding offer for Atmel (ATML +0.8%) by early next week. It adds the microcontroller makers have "made some progress" in M&A talks, and that Microchip's due diligence process has taken longer than expected due to worries about "weaker business trends facing Atmel."
- Reuters reported in mid-December Microchip had made a $9/share offer for Atmel. Atmel, still officially set to be acquired by Dialog Semi (OTC:DLGNF) in a cash/stock deal, previously disclosed it had received a new buyout offer, but didn't name the suitor.
- Atmel caught a slight bid on Reuters' report just before the close. Shares closed today at $8.68.
Mon, Jan. 4, 9:03 AM| Mon, Jan. 4, 9:03 AM
- December monthly performance was: -1.6%
- 52-week performance vs. the S&P 500 is: -3%
- $0.65 in dividends were paid in December
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Microchip Technology, Inc. develops and manufactures specialized semiconductor products. It engages primarily in the design, development, manufacture and marketing of semiconductor products as well as the licensing of Flash intellectual property. The Company operates in the following segments:... More
Industry: Semiconductor - Specialized
Country: United States
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