Microchip Sinks on Lowered 1Q View

By Features FOXBusiness

Shares of Microchip Technology (MCHP) tumbled nearly 10% Tuesday morning in response to the companys gloomier guidance about the current quarter.

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After Mondays closing bell, Microchip, which makes microcontrollers and analog semiconductors, cut its fiscal first-quarter guidance amid broad-based weakness.

The Chandler, Ariz.-based tech company said it now sees first-quarter non-GAAP EPS of 53 cents to 55 cents on a 1.5% sequential decline in sales. Previously, Microchip forecasted non-GAAP EPS of 58 cents to 62 cents on a 1% to 6% sequential rise in revenue.

Steve Sanghi, the CEO of Microchip, blamed the weaker-than-expected preliminary results on a range of factors, including weakness in its auto business in the wake of the Japan earthquake, high unemployment, lofty oil prices and high unemployment.

In response, analysts at UBS downgraded Microchip to neutral from buy. JPMorgan slashed its price target to $29 from $36 and maintained its neutral rating.

While we are obviously disappointed with our June quarter results, we continue to see excellent design win traction in our microcontroller and analog product lines and maintain a strong competitive position, Sanghi said.

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Looking ahead, Microchip warned it expects its September quarter revenue to be down low to mid-single digits sequentially.

Shareholders punished Microchip for the disappointing guidance, sending its stock dropping 8.97% to $37.48 ahead of Tuesdays open.

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