Back to top

Analyst Blog

Leading semiconductor manufacturer Microchip Technology Inc. (MCHP - Analyst Report) recently narrowed its second quarter fiscal 2014 guidance range to better reflect an improving business environment and strong earnings potential with increased bookings.

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. (MPWR - Snapshot Report), MagnaChip Semiconductor Corporation (MX - Snapshot Report) and MaxLinear, Inc. (MXL - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%
STRATTEC SE… STRT 80.24 +3.00%