Latest news with #SteveSanghi
Yahoo
4 days ago
- 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
Globe and Mail
29-05-2025
- Business
- Globe and Mail
Microchip Technology Raises Financial Guidance for Sales and EPS for First Quarter of Fiscal Year 2026
CHANDLER, Ariz., May 29, 2025 (GLOBE NEWSWIRE) -- Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today updated the range of its prior guidance for net Sales and GAAP and non-GAAP earnings per share for its fiscal first quarter of 2026 ending June 30, 2025. Microchip now expects consolidated net sales for the June quarter to be between $1.045 billion and $1.070 billion. Microchip previously provided guidance on May 8, 2025 of consolidated net sales to be between $1.025 billion and $1.070 billion. GAAP loss per share is now expected to be between $(0.11) and $(0.07), and non-GAAP earnings per share is now expected to be between $0.22 and $0.26. The original guidance for the GAAP loss per share was $(0.15) and $(0.07), and the original guidance for non-GAAP earnings per share was between $0.18 and $0.26. Steve Sanghi, Microchip's CEO and President, commented, "With almost two months of the quarter behind us, our business is performing better than we expected at the time of our May 8, 2025 earnings conference call. Our bookings activity for the month of May is tracking to be higher than any month in the last two years. We are gaining confidence in the recovery of our business as we execute on our strategic initiatives, reduce inventory levels and make progress towards our long-term business model." There will be no conference call associated with this press release. Microchip is attending the Stifel 2025 Cross Border 1x1 Conference and the B of A Securities Global Technology Conference on Wednesday June 3, 2025. A live webcast and replays from the B of A Conference will be available at Cautionary Statement: The statements in this release relating to expecting consolidated net sales for the June quarter to be between $1.045 billion and $1.070 billion, GAAP loss per share to be between $(0.11) and $(0.07), non GAAP earnings per share to be between $0.22 and $0.26, that our business is performing better than we expected, that our bookings activity for the month of May is tracking to be higher than any month in the last two years, that we are gaining confidence in the recovery of our business as we execute on our strategic initiatives, reduce inventory levels and make progress towards our long-term business model are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued uncertainty, fluctuations or weakness in the U.S. and world economies (including China and Europe) due to changes in the scope and level of tariffs, interest rates or high inflation, actions taken or which may be taken by the Trump administration or the U.S. Congress (including budget and tax legislation), monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally (including the military conflicts in Ukraine-Russia and the Middle East), further changes in demand or market acceptance of our products and the products of our customers and our ability to respond to any increases or decreases in market demand or customer requests to reschedule or cancel orders; the mix of inventory we hold, our ability to satisfy any short-term orders from our inventory and our ability to effectively manage our inventory levels; foreign currency effects on our business; changes in utilization of our manufacturing capacity and our ability to effectively manage our production levels to meet any increases or decreases in market demand or any customer requests to reschedule or cancel orders; the impact of inflation on our business; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; our ability to realize the expected benefits of our long-term supply assurance program; changes or fluctuations in customer order patterns and seasonality; our ability to effectively manage our supply of wafers from third party wafer foundries to meet any decreases or increases in our needs and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any future increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of any future significant acquisitions or strategic transactions we may make; the costs and outcome of any current or future litigation or other matters involving our acquisitions (including the acquired business, intellectual property, customers, or other issues); the costs and outcome of any current or future tax audit or investigation regarding our business or our acquired businesses; the impact that the CHIPS Act will have on increasing manufacturing capacity in our industry by providing incentives for us, our competitors and foundries to build new wafer manufacturing facilities or expand existing facilities; the amount and timing of any incentives we may receive under the CHIPS Act, the impact of current and future changes in U.S. corporate tax laws (including the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017); fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally. For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip's website ( or the SEC's website ( or from commercial document retrieval services. Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this May 8, 2025 press release, or to reflect the occurrence of unanticipated events. About Microchip: 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. Our solutions serve approximately 109,000 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 Incorporated in the U.S.A. and other countries. All other trademarks mentioned herein are the property of their respective companies.
Yahoo
29-05-2025
- Business
- Yahoo
Microchip Technology Raises Financial Guidance for Sales and EPS for First Quarter of Fiscal Year 2026
CHANDLER, Ariz., May 29, 2025 (GLOBE NEWSWIRE) -- Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today updated the range of its prior guidance for net Sales and GAAP and non-GAAP earnings per share for its fiscal first quarter of 2026 ending June 30, 2025. Microchip now expects consolidated net sales for the June quarter to be between $1.045 billion and $1.070 billion. Microchip previously provided guidance on May 8, 2025 of consolidated net sales to be between $1.025 billion and $1.070 billion. GAAP loss per share is now expected to be between $(0.11) and $(0.07), and non-GAAP earnings per share is now expected to be between $0.22 and $0.26. The original guidance for the GAAP loss per share was $(0.15) and $(0.07), and the original guidance for non-GAAP earnings per share was between $0.18 and $0.26. Steve Sanghi, Microchip's CEO and President, commented, "With almost two months of the quarter behind us, our business is performing better than we expected at the time of our May 8, 2025 earnings conference call. Our bookings activity for the month of May is tracking to be higher than any month in the last two years. We are gaining confidence in the recovery of our business as we execute on our strategic initiatives, reduce inventory levels and make progress towards our long-term business model." There will be no conference call associated with this press release. Microchip is attending the Stifel 2025 Cross Border 1x1 Conference and the B of A Securities Global Technology Conference on Wednesday June 3, 2025. A live webcast and replays from the B of A Conference will be available at Cautionary Statement: The statements in this release relating to expecting consolidated net sales for the June quarter to be between $1.045 billion and $1.070 billion, GAAP loss per share to be between $(0.11) and $(0.07), non GAAP earnings per share to be between $0.22 and $0.26, that our business is performing better than we expected, that our bookings activity for the month of May is tracking to be higher than any month in the last two years, that we are gaining confidence in the recovery of our business as we execute on our strategic initiatives, reduce inventory levels and make progress towards our long-term business model are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued uncertainty, fluctuations or weakness in the U.S. and world economies (including China and Europe) due to changes in the scope and level of tariffs, interest rates or high inflation, actions taken or which may be taken by the Trump administration or the U.S. Congress (including budget and tax legislation), monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally (including the military conflicts in Ukraine-Russia and the Middle East), further changes in demand or market acceptance of our products and the products of our customers and our ability to respond to any increases or decreases in market demand or customer requests to reschedule or cancel orders; the mix of inventory we hold, our ability to satisfy any short-term orders from our inventory and our ability to effectively manage our inventory levels; foreign currency effects on our business; changes in utilization of our manufacturing capacity and our ability to effectively manage our production levels to meet any increases or decreases in market demand or any customer requests to reschedule or cancel orders; the impact of inflation on our business; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; our ability to realize the expected benefits of our long-term supply assurance program; changes or fluctuations in customer order patterns and seasonality; our ability to effectively manage our supply of wafers from third party wafer foundries to meet any decreases or increases in our needs and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any future increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of any future significant acquisitions or strategic transactions we may make; the costs and outcome of any current or future litigation or other matters involving our acquisitions (including the acquired business, intellectual property, customers, or other issues); the costs and outcome of any current or future tax audit or investigation regarding our business or our acquired businesses; the impact that the CHIPS Act will have on increasing manufacturing capacity in our industry by providing incentives for us, our competitors and foundries to build new wafer manufacturing facilities or expand existing facilities; the amount and timing of any incentives we may receive under the CHIPS Act, the impact of current and future changes in U.S. corporate tax laws (including the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017); fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally. For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip's website ( or the SEC's website ( or from commercial document retrieval services. Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this May 8, 2025 press release, or to reflect the occurrence of unanticipated events. About Microchip: 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. Our solutions serve approximately 109,000 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 Incorporated in the U.S.A. and other countries. All other trademarks mentioned herein are the property of their respective companies. INVESTOR RELATIONS CONTACT:Sajid Daudi -- Head of Investor Relations..... (480) 792-7385
CNBC
16-05-2025
- Business
- CNBC
Microchip CEO: We have not seen any tariff-related pull forward
Steve Sanghi, Microchip Technology CEO, joins CNBC's 'Money Movers' to discuss outlooks on the chips sector, the company's most recent quarter, and more.
Yahoo
11-05-2025
- Business
- Yahoo
Why Microchip Technology Inc. (MCHP) Soared On Friday
We recently published a list of In this article, we are going to take a look at where Microchip Technology Inc. (NASDAQ:MCHP) stands against other Friday's best-performing stocks. The stock market edged lower on the last day of the trading week as investors sold off positions to mitigate risks from the anticipated trade talks between the US and China this weekend. The Dow Jones and the S&P 500 both fell by 0.29 percent and 0.07 percent, respectively. In contrast, the tech-heavy Nasdaq ended flat. Beyond the major indices, 10 companies traded strongly, finishing with as much as double-digit gains, thanks to the continued positive earnings performance and optimistic outlooks. In this article, we name Friday's 10 best-performing stocks and detail the reasons behind their gains. To come up with the list, we considered only the stocks with a $2-billion market capitalization and $5-million trading volume. A semiconductor wafer at various stages of fabrication, showing the company's range of expertise. Microchip Technology saw its share prices jump by 12.6 percent on Friday to end at $55.33 apiece as investors loaded up positions after earning a rating upgrade from Bank of America. In its market note, Bank of America raised Microchip Technology Inc. (NASDAQ:MCHP) to Neutral from Underperform amid the latter's early signs of sales recovery, aggressive cost-cutting measures, and renewed strategic focus under its returning CEO. 'The return of well-regarded prior CEO Steve Sanghi has greatly enhanced the level of restructuring urgency and customer/product focus at Microchip,' Bank of America said. Additionally, the investment firm raised its price target for Microchip Technology Inc. (NASDAQ:MCHP) to $56 from $44 previously, albeit just a 1.2 percent upside from its latest closing price. Still, it said that it was confident about the semiconductor manufacturer's earnings potential. 'Even a modest sales rebound could translate into outsized earnings leverage,' it said. In the first quarter of the year, the company swung to a net loss attributable to shareholders of $156.8 million from a $154.7 million net profit in the same period last year. Net sales dropped by 27 percent to $970.5 million from $1.325 billion year-on-year. Overall, MCHP ranks 4th on our list of Friday's best-performing stocks. While we acknowledge the potential of MCHP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
