Summary
Microchip Technology Incorporated filed an 8-K on October 9, 2007, to report preliminary results for its second quarter of fiscal year 2008, ending September 30, 2007. The company highlighted strong performance in its 8-bit microcontroller product line, with 9 new products introduced. Development tool shipments remained robust, reaching the second-highest level ever. Microchip is on track to ship its 6 billionth microcontroller in early 2008. However, the filing also indicated a slowdown in the U.S. housing sector, with Microchip's internal housing index for 10 key customers dropping from 86% to 81%. Despite this, the company continues to generate significant free cash flow, estimated at approximately $110 million for the quarter before dividends and buybacks. Gross margins are expected to remain near record levels around 60.4%, with further increases anticipated in the next quarter due to depreciation roll-off. Inventory levels are projected to increase, reaching about 112 days in the September quarter and growing further into the December quarter.
Key Highlights
- 1Preliminary Q2 FY2008 results announced on October 8, 2007.
- 2Introduced 9 new products in the 8-bit microcontroller line, bringing the total to 382.
- 3Development tool shipments reached the second-highest level ever, following a record in the previous quarter.
- 4On track to ship the 6 billionth microcontroller in January 2008.
- 5Noted a decline in the U.S. housing sector impact, with the internal housing index dropping to 81% from 86%.
- 6Generated approximately $110 million in free cash flow from operations (before dividends/buybacks) for the September 2007 quarter.
- 7Expected gross margins near record levels of approximately 60.4% for the September quarter, with further improvements anticipated.