Latest news with #MCHP
Yahoo
10-06-2025
- Business
- Yahoo
MCHP Q1 Earnings Call: Inventory Reduction, Operational Restructuring, and Signs of Recovery
Analog chipmaker Microchip Technology (NASDAQ:MCHP) beat Wall Street's revenue expectations in Q1 CY2025, but sales fell by 26.8% year on year to $970.5 million. On top of that, next quarter's revenue guidance ($1.05 billion at the midpoint) was surprisingly good and 5.1% above what analysts were expecting. Its non-GAAP profit of $0.11 per share was in line with analysts' consensus estimates. Is now the time to buy MCHP? Find out in our full research report (it's free). Revenue: $970.5 million vs analyst estimates of $961.2 million (26.8% year-on-year decline, 1% beat) Adjusted EPS: $0.11 vs analyst estimates of $0.10 (in line) Adjusted EBITDA: $200.4 million vs analyst estimates of $162.4 million (20.6% margin, 23.4% beat) Revenue Guidance for Q2 CY2025 is $1.05 billion at the midpoint, above analyst estimates of $994.5 million Adjusted EPS guidance for Q2 CY2025 is $0.22 at the midpoint, above analyst estimates of $0.15 Operating Margin: -10.3%, down from 19.1% in the same quarter last year Inventory Days Outstanding: 251, down from 266 in the previous quarter Market Capitalization: $36.71 billion Microchip Technology's first quarter results were shaped by a significant reset across its operations, as management executed a broad restructuring plan and continued to address elevated inventory levels. CEO Steve Sanghi highlighted the closure of the Tempe Fab 2 facility and a 10% reduction in headcount as key cost-cutting moves, while also emphasizing a renewed focus on improving customer relationships and product development priorities. The company reported meaningful progress in inventory reduction, achieving the first notable decline in days of inventory in three years, and completed a business unit reorganization to better align with evolving market needs. Sanghi noted, 'We have already been able to restore 78% of previously stressed customer relationships to approved or preferred status,' marking a resolution to what management described as a lingering post-pandemic challenge. Looking ahead, Microchip Technology's guidance for the next quarter reflects optimism driven by early signs of demand recovery and a normalization of inventory levels among customers and distributors. Management attributes the improved outlook to a 'trifecta' of distributor restocking, direct customer inventory drawdown, and an uptick in new product design wins. Sanghi explained, 'Bookings in the March quarter were up significantly from any prior quarter, and bookings in April were higher than any other month this year.' The company also expects gross margin improvement as underutilization and inventory reserve charges decline. However, management acknowledged persistent uncertainties around global tariffs and the pace of the broader economic recovery, emphasizing that the ability to ramp production efficiently and maintain cost discipline will be critical in sustaining profitability gains. Management pointed to operational restructuring, customer engagement improvements, and targeted product innovation as the primary drivers behind the quarter's outcomes and the company's forward strategy. Manufacturing footprint reduction: The closure of Tempe Fab 2 and completed adjustments to other facilities have trimmed capacity, but left Microchip Technology able to increase output quickly if demand returns, improving operational flexibility. Inventory management progress: The company reported its first meaningful reduction in inventory days in three years, with a goal to further decrease inventory by over $350 million this year, which is expected to release cash and support future operations. Customer relationship restoration: After reviewing and addressing deteriorated customer relationships from the pandemic period, management claims 78% of affected accounts have been restored to preferred or approved status, with only 2.6% requiring further attention. Strategic realignment of product focus: Management has shifted its megatrend priorities, replacing 5G with artificial intelligence and elevating network and connectivity, reflecting where management sees future growth opportunities. Product development efficiency: The integration of 8-bit and 32-bit microcontroller business units and investment in AI-driven development tools are expected to accelerate design cycles, making it easier for customers to adopt Microchip Technology's solutions and potentially broadening its market reach. Microchip Technology's guidance is underpinned by anticipated demand recovery, ongoing inventory normalization, and cost discipline, while management remains watchful of external risks. Demand recovery and inventory normalization: Management expects improved revenue as distributor restocking accelerates and direct customers increase orders, supported by higher bookings and a healthy backlog. These trends are attributed to the resolution of excess inventory at distributors and end customers, rather than one-off demand spikes. Margin improvement from operational leverage: As inventory write-offs and underutilization charges subside, management anticipates gross margin expansion, with incremental sales expected to contribute strongly to operating profit. However, the company notes that the pace of recovery and the absorption of higher-cost inventory will influence the timing and extent of margin gains. Ongoing external risks: The company continues to monitor the impact of global tariffs and shifting production requirements, particularly in China, which could affect both supply chain strategy and end-market demand. Management has modeled potential downside scenarios and believes its current manufacturing footprint provides flexibility to adapt as needed. Going forward, the StockStory team will track (1) Microchip Technology's progress in reducing inventory days toward its 130-150 day target, (2) the pace and consistency of bookings growth and backlog fill across key end markets such as industrial, automotive, and aerospace/defense, and (3) improvements in gross margin as underutilization and inventory reserve charges abate. Additionally, we will monitor the adoption of new products in AI, connectivity, and embedded systems as indicators of strategic execution. Microchip Technology currently trades at a forward P/E ratio of 60.2×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
29-05-2025
- Business
- Wall Street Journal
Microchip Technology Narrows Outlook on Higher Bookings
Microchip Technology MCHP 1.13%increase; green up pointing triangle raised the low ends of its sales and earnings guidance for its fiscal first quarter, thanks to higher-than-expected bookings. The semiconductor provider now expects sales to be $1.045 billion to $1.07 billion in the quarter ending June 30, a tighter range than previous guidance of $1.025 billion to $1.07 billion.
Yahoo
28-05-2025
- Business
- Yahoo
1 High-Flying Stock with Impressive Fundamentals and 2 to Keep Off Your Radar
Expensive stocks typically earn their valuations through superior growth rates that other companies simply can't match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts. Separating true intrinsic value from speculation isn't easy, especially during bull markets. That's where StockStory comes in - to help you find high-quality companies that will stand the test of time. That said, here is one high-flying stock expanding its competitive advantage and two with big downside risk. Forward P/E Ratio: 52x Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices. Why Is MCHP Risky? Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.6% annually over the last five years Operating margin declined by 11.6 percentage points over the last five years as its sales cratered Free cash flow margin dropped by 16 percentage points over the last five years, implying the company became more capital intensive as competition picked up Microchip Technology is trading at $59.18 per share, or 52x forward P/E. To fully understand why you should be careful with MCHP, check out our full research report (it's free). Forward P/E Ratio: 33.1x With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes. Why Does GDYN Worry Us? Revenue base of $371.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.5% annually while its revenue grew Push for growth has led to negative returns on capital, signaling value destruction Grid Dynamics's stock price of $12.50 implies a valuation ratio of 33.1x forward P/E. Check out our free in-depth research report to learn more about why GDYN doesn't pass our bar. Forward P/S Ratio: 11.2x Short for microcomputer software, Microsoft (NASDAQ:MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services. Why Are We Bullish on MSFT? Microsoft is one of the great brands not just in tech but all of business. It produces mission-critical software and bundles it together, resulting in cream-of-the-crop gross margins. The company's elite unit economics lead to robust profit margins that improve over time. This speaks to the scale advantages and operating efficiency across its diverse portfolio, which spans everything from Office and Azure to Minecraft. Microsoft has a virtuous cycle of returns. Its dominant market position enables it to generate strong free cash flow, and it reinvests these funds into promising ventures that further strengthen its competitive moat. At $460.25 per share, Microsoft trades at 32.5x forward price-to-earnings. Is now the right time to buy? See for yourself in our comprehensive research report, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Globe and Mail
27-05-2025
- Business
- Globe and Mail
Microchip Technology to Present at the TD Cowen 53rd Annual Technology, Media & Telecom Conference
CHANDLER, Ariz., May 27, 2025 (GLOBE NEWSWIRE) -- (NASDAQ:MCHP) – Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today announced that the Company will present at the TD Cowen 53rd Annual Global Technology, Media, and Communications Conference on Wednesday, May 28, 2025 at 10:50 a.m. (Eastern Time). Presenting for the Company will be Mr. Richard Simoncic, Chief Operating Officer, and Mr. Eric Bjornholt, Senior Vice President and Chief Financial Officer. A live webcast of the presentation will be made available by Cowen, and can be accessed on the Microchip website at Any forward looking statements made during the presentation are qualified in their entirety by the discussion of risks set forth in the Company's Securities and Exchange Commission filings. Copies of SEC filings can be obtained for free at the SEC's website ( or from commercial document retrieval services. Microchip Technology Incorporated is a leading provider of smart, connected and secure embedded control solutions. Its easy-to-use development tools and comprehensive product portfolio enable customers to create optimal designs, which reduce risk while lowering total system cost and time to market. The company's solutions serve approximately 112,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at Note: The Microchip name and logo are registered trademarks of Microchip Technology Inc. in the USA and other countries.
Yahoo
20-05-2025
- Business
- Yahoo
Microchip Technology Incorporated (MCHP): A Bull Case Theory
We came across a bullish thesis on Microchip Technology Incorporated (MCHP) on Substack by Serhio MaxDividends and Max Dividends. In this article, we will summarize the bulls' thesis on MCHP. Microchip Technology Incorporated (MCHP)'s share was trading at $60.80 as of May 15th. MCHP's trailing and forward P/E were 31.39 and 44.05 respectively according to Yahoo Finance. Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process. Microchip Technology Inc (MCHP) is a premier semiconductor firm known for its leadership in microcontrollers (MCUs), analog chips, and embedded connectivity solutions that power critical systems across automotive, industrial, data center, and consumer sectors. Based in Chandler, Arizona, the company serves over 125,000 customers worldwide with a broad and diversified portfolio exceeding 18,000 SKUs. Its focus on low-power, long-lifecycle chips makes it a go-to supplier for mission-critical and durable applications. Microchip's legacy lies in its 8-bit, 16-bit, and 32-bit PIC® MCUs, while its newer expansions into AI-accelerated edge computing and secure connectivity open the door to future growth in IoT and smart devices. The company operates a highly capital-efficient "fab-lite" model and has a track record of strong free cash flow generation—averaging $2 billion annually. It has increased its dividend for 23 consecutive years and currently offers a 3.2% yield (as of 2024), highlighting its financial discipline. Key acquisitions—including SST, Micrel, and Microsemi—have strategically broadened Microchip's capabilities and end-market reach. Its long-standing commitment to supporting products for decades underpins its brand as a trusted supplier to industries ranging from space exploration to home automation. With semiconductors becoming the backbone of everything from electric vehicles and ADAS to industrial automation and smart manufacturing, Microchip is positioned for robust, sustained growth. Also, take a look at a recent article on the world's largest semiconductor manufacturing company—Taiwan Semiconductor Manufacturing. Strategic R&D investment, a resilient business model, and strong operating margins support this momentum. Though macro risks like supply chain disruptions and geopolitical tensions persist, Microchip offers a rare mix of dependable income and long-term upside in the evolving tech landscape. Microchip Technology Incorporated (MCHP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held MCHP at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of MCHP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MCHP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey.
