ATML
Atmel Corporation

Summary

conference date: April 25, 2006
for quarter ending: March 31, 2006 (1st quarter 2006)

Overview: Atmel continues to generate sales with slow growth and little earnings to show for it.

Basic data:

Revenues of $436.8, up 2.8% sequentially, but only 4% over year-earlier. Earnings of $9.2 million or .02 per share, down from .11 in the prior quarter but up from a loss of .09 year-earlier. This quarters earnings included a 3.4 million charge for stock-based compensation.

ASICs 36%, microcontrollers 22%, RF and automotive 21%, memory 21%.

Gross margin 32.3%. AVR microcontrollers record sales. Foreign exchange loss $5.6 million.

Cash and equivalents ended at $398 million, up $50 million. Liabilities reduced by $7 million. Inventories of $317 million.

Guidance: June quarter revenues up 1 to 3% sequentially. 31 to 33 % gross margin. No EPS estimate, but for expenses: R&D $71-73 million; SG&A $48-50 milion; $3 million stock-based compensation; Depreciation & amortization $58 to 60 million.

Conference Highlights:

32-bit AVR microcontroller introduced in February. Energy-saving AVR Pico-Power introduced in March. Shipping latest GPS chip sets.

Microcontroller business up 13%. AVR microcontroller subsegment grew 32% sequentially. ASIC revenue up 13%; smart card revenue up 5%. RF revenue down 2%; believes that is seasonal. Non-violatile revenue down 3%.

Demand for products is robust and new products are gaining traction.

Q&A:

Pricing environment for non-AVR micros? Maintains current customer base, price steadilly declines.

R&D & SG&A for remainder of year? SG&A might be higher in 2nd quarter, but basically flat for year.

Phillipines test operation? Yes, transition is taking place.

Book to bill? Don't announce specifics, but was over 1.

Op Ex appears to be growing 3% sequentially, why? SG&A was depressed in Q4, in Q2 expect higher legal expense, not much visibility beyond that. R&D hoping for efficiencies, but not coming down as fast as hoped.

Continues to evaluate possible exits from non-core business segments like imaging.

Capital Expenditure going forward? British smart card facility has switched to 50% to micros. Planning for $30 million; all increased capacity from outsourcing.

Dynamics in micro market? Has introduced products over the years, including analog blocks on board, so just a cumulation of design wins. Expects 32-bit AVR to be a win. Variable power family introduced; right products for market.

Tool kit sales is high.

Memory sold 100 million units; but slow growth. Helps to win customers for micros.

Expects exchange rate to be 1.24 for Q2, was 1.0 for Q1.

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