Microchip Technology revealed it improved its revenue sequentially in the fiscal fourth-quarter despite grappling with COVID-19 supply chain issues. The company’s financial results also defied market analyst expectations of its performance.
The manufacturer offered projections for the June period that predict a significant but likely temporary downturn in demand.
Microchip Technology Overcomes Obstacles in FQ4
The Chandler, Arizona-based component company recorded revenue of $1.36 billion in the first three months of the year. Though the firm’s sales dipped by 0.3 percent yearly, it improved upon its holiday season intake by $2.2 million. Notably, Microchip kept its results within its revised quarterly guidance despite the coronavirus pandemic interrupting its production and delivery operations.
In fact, the manufacturer managed to reduce its days in inventory from 129 to 122 in the last period.
The firm also brought in $375.5 million in adjusted net income with earnings per share of $1.46. While the company’s profits fell by 1.35 percent from last year, they beat Zack Equity Research’s consensus estimate by 6.6 percent. By segment, it saw its biggest gains from FQ3 in its licensing, memory, and other (10.3 percent); FPGA (7.3 percent); and microcontroller (5.9 percent) units.
In a statement, COO Ganesh Moorthy said his team’s ability to adjust to new conditions and implement contingency plans quickly allowed Microchip to post sequential growth.
Hard Road Ahead
Because of the ongoing impact of the coronavirus pandemic, Microchip offered very broad guidance for its June quarter financial results. The firm forecasts revenue of $1.19 billion to $1.31 billion in FQ1 2021, which would be a year-over-year decline of 10.5 or 1.5 percent. The company also projects adjusted net income of $283.7 million to $294.6 million, an annual drop of 20.6 to 17.6 percent.
Microchip CEO Steve Sanghi said his firm’s June quarter revenue would decrease due to worldwide economic contractions. He also noted the corporation’s backlog of orders has fallen from the March quarter and will likely continue to drop in the June period. Consequently, the company has made plans to initiate a salary cut and reduce its work hours.
Sanghi also declared his organization has frozen business travel and discretionary spending but will continue to invest in technology and equipment used to optimize its operations.
Despite the corporation’s down near-term outlook, its commitment to continuity and innovation are positive signs. Moreover, the firm’s gesture recognition and touch screen offerings have the potential to revolutionize the automotive sector. Most importantly, Microchip’s operational resilience in the face of crisis indicates its inevitable rebound will be swift and robust.