|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Summary
conference date: April 25, 2006
for quarter ending: March 31, 2006 (4th fiscal quarter 2006)
Overview: Excellent quarter and excellent outlook. No other surprises, but dividend increased.
Basic data: Record revenues of $247.2, up 5.2% sequentially and 18.8% from year-earlier. GAAP net income of $75.6 million, or .35 per share, up 6.8% sequentially. Book-to-bill ratio of 1.07.
Record gross margin of 60.1% and operating margin of 36.2%.
Net cash generated was $110 million prior to $40.5 million in dividend payments.
Cash and short-term investments ended at $765 million.
Guidance: Revenues in June quarter to be up 5 to 6%. GAAP EPS .35/share. Net cash flows in fiscal 2007, prior to dividend payments, will be approx. $500 million. Gross margins about 60.3 to 60.5%.
Conference Highlights: Declared an increased quarterly dividend of 21.5 cents per share. Expect another healthy increase in dividends next quarter.
Microcontroller revenue grew 4.9% sequentially, 17.8% year-over-year. Flash microcontroller revenue grew 9.6% sequentially and 42% over year-earlier. Analog revenue grew 17% sequentially and 52% annually. 16-bit architecture revenues growing rapidly (46%).
Many new products were released. One forward indicator would be the shipment of a record 19,991 development systems during the quarter.
Inventory is at a comfortable level. Distribution strategy: continuing to add regional distributors in Europe and Asia. Global distributors carry competitors too, and are not good at creating demand, but are efficient in serving it. MCHP is therefore increasing its direct marketing, with global distributors doing fulfillment.
Fabrication capacity is $1.4 billion, with clean room space for $.3 billion more. Moving into foundry business with new products, which they see becoming 10% of sales within a few years.
Q&A:
8-bit flash micro competition? Named many, but only MCHP is only one gaining market share, now at 35%.
Cap Ex: Capital expenditures should stay in same range (8 to 10% of sales). Capacity is quite adequate for now.
Lead times? Not really possible to shorten further; already best in industry, 3 to 6 weeks.
Foundry business plans? A secret for now. Should have no impact on low capital intensity.
ROM - based microcontroller introduction is to take advantage of the legacy market, capturing customers that would be lost otherwise.
32-bit microcontrollers? Our 16-bit micro's beat 32-bit ARM in performance. So no 32-bit plans.
Not encouraging distributors to carry more inventory; like low distributor inventory; don't recognize income until sell-through.
Asia? March quarter is down seasonally every year. Expects strong June quarter, as always.
Analog? Because microcontrollers have analog on them, they realized they had great expertise. Realized need for strong stand-alone analog products, which are highly segmented. Did get out of handset business because of low margins.
Will continue to make substantial investments in personnel, marketing and other items needed to grow top line.
Lead times don't help short term because design cycle is a minimum of 3 months; chips are proprietary, you can't just plug in a competitor's.
Tool sales does not always correlate well with near-future chips sales.
Memory division is growing, not as big a part of MCHP business as it was a few years ago.
OpenIcon Analyst Conference Summaries Main Page
Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. Before making or terminating an investment you should always verify any factual basis of your decision from multiple independent sources.
Copyright 2006 William P. Meyers