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Microchip's (MCHP) Microcontroller Sales Lag Estimates in Q2
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Microchip’s (MCHP - Free Report) second-quarter fiscal 2024 mixed-signal microcontroller sales of $1.28 billion lagged the Zacks Consensus Estimate by 0.5%. Mixed-signal microcontroller sales grew 8.5% year over year but declined 1.7% sequentially and accounted for 56.8% of sales in the reported quarter.
In the reported quarter, Microchip reported non-GAAP earnings of $1.62 per share, which were in line with the Zacks Consensus Estimate and rose 11% on a year-over-year basis.
Net sales of $2.25 billion increased 8.7% year over year but lagged the Zacks Consensus Estimate by 0.2%.
Click here to check the details of Microchip’s fiscal second-quarter results.
Microcontroller Sales Suffer From Challenging Conditions
Microchip’s mixed-signal microcontroller sales in the fiscal second quarter suffered from challenging macroeconomic conditions, along with persistent inflation and high interest rates.
It witnessed inventory correction at the customer end with requests for push-out and cancellations. Microchip’s channel inventory grew to 235 days at the end of the reported quarter.
Meanwhile, lead times have decreased from approximately 52 weeks at the start of 2023 to approximately 26 weeks at the end of June and roughly 13 weeks at the end of the September quarter. Microchip now expects average lead times to decline to less than 8 weeks by the end of this calendar year.
However, declining lead times are resulting in lower bookings and reduced near-time visibility. Moreover, due to the weakening demand and challenging macroeconomic environment, Microchip has paused internal capacity expansion that is expected to lower capital expenditure spending in fiscal 2024 and 2025.
Third-Quarter View Reflects Tough Environment
Microchip expects net sales to be $1.8-$1.916 billion for the third quarter of fiscal 2024, suggesting a decline between 15% and 20% on a sequential basis. At the mid-point of this guidance, revenues are expected to decline 14.3%.
The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1.86 billion, indicating a 14.21% year-over-year decline.
Microchip also expects fourth-quarter fiscal 2024 revenues to decline sequentially, although to a lesser extent compared with the fiscal third quarter.
For the fiscal third quarter, non-GAAP earnings are anticipated between $1.09 per share and $1.17 per share.
The consensus mark for fiscal third-quarter earnings is pegged at $1.38 per share, down 3.5% over the past 30 days.
Zacks Rank & Upcoming Earnings to Watch
Currently, Microchip has a Zacks Rank #4 (Sell).
Its shares have gained 6.9% year to date, underperforming the Zacks Computer & Technology sector’s increase of 37.1%.
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Microchip's (MCHP) Microcontroller Sales Lag Estimates in Q2
Microchip’s (MCHP - Free Report) second-quarter fiscal 2024 mixed-signal microcontroller sales of $1.28 billion lagged the Zacks Consensus Estimate by 0.5%. Mixed-signal microcontroller sales grew 8.5% year over year but declined 1.7% sequentially and accounted for 56.8% of sales in the reported quarter.
In the reported quarter, Microchip reported non-GAAP earnings of $1.62 per share, which were in line with the Zacks Consensus Estimate and rose 11% on a year-over-year basis.
Net sales of $2.25 billion increased 8.7% year over year but lagged the Zacks Consensus Estimate by 0.2%.
Click here to check the details of Microchip’s fiscal second-quarter results.
Microcontroller Sales Suffer From Challenging Conditions
Microchip’s mixed-signal microcontroller sales in the fiscal second quarter suffered from challenging macroeconomic conditions, along with persistent inflation and high interest rates.
It witnessed inventory correction at the customer end with requests for push-out and cancellations. Microchip’s channel inventory grew to 235 days at the end of the reported quarter.
Microchip Technology Incorporated Revenue (TTM)
Microchip Technology Incorporated revenue-ttm | Microchip Technology Incorporated Quote
Meanwhile, lead times have decreased from approximately 52 weeks at the start of 2023 to approximately 26 weeks at the end of June and roughly 13 weeks at the end of the September quarter. Microchip now expects average lead times to decline to less than 8 weeks by the end of this calendar year.
However, declining lead times are resulting in lower bookings and reduced near-time visibility. Moreover, due to the weakening demand and challenging macroeconomic environment, Microchip has paused internal capacity expansion that is expected to lower capital expenditure spending in fiscal 2024 and 2025.
Third-Quarter View Reflects Tough Environment
Microchip expects net sales to be $1.8-$1.916 billion for the third quarter of fiscal 2024, suggesting a decline between 15% and 20% on a sequential basis. At the mid-point of this guidance, revenues are expected to decline 14.3%.
The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1.86 billion, indicating a 14.21% year-over-year decline.
Microchip also expects fourth-quarter fiscal 2024 revenues to decline sequentially, although to a lesser extent compared with the fiscal third quarter.
For the fiscal third quarter, non-GAAP earnings are anticipated between $1.09 per share and $1.17 per share.
The consensus mark for fiscal third-quarter earnings is pegged at $1.38 per share, down 3.5% over the past 30 days.
Zacks Rank & Upcoming Earnings to Watch
Currently, Microchip has a Zacks Rank #4 (Sell).
Its shares have gained 6.9% year to date, underperforming the Zacks Computer & Technology sector’s increase of 37.1%.
Investors are eagerly waiting for upcoming releases from NetEase (NTES - Free Report) , NVIDIA (NVDA - Free Report) and Model N (MODN - Free Report) , which are some better-ranked stocks in the broader Zacks Computer & Technology sector. Each of the stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 53.6% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
NVIDIA shares have returned 213.1% year to date. NVDA is set to report its third-quarter fiscal 2024 results on Nov 21.
Model N shares have declined 37.6% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.