Microchip Technology (MCHP) late Tuesday matched Wall Street's target for earnings in its fiscal second quarter, but sales were lighter than forecast. It also badly missed analyst estimates for the current quarter. The Microchip earnings news drove MCHP stock sharply lower in extended trading.
XThe Chandler, Ariz.-based company earned an adjusted $1.43 a share on sales of $1.34 billion in the quarter ended Sept. 30. Analysts expected Microchip earnings of $1.43 a share on sales of $1.35 billion, according to Zacks Investment Research. On a year-over-year basis, Microchip earnings fell 21% while sales dropped 7%.
For the current quarter, Microchip expects to earn an adjusted $1.22 a share on sales of $1.26 billion. That's based on the midpoint of its guidance. Analysts were looking for Microchip earnings of $1.44 a share on sales of $1.35 billion in the December quarter. In the year-earlier period, Microchip earned $1.66 a share on sales of $1.37 billion.
Microchip Technology makes microcontroller, analog, connectivity and power management semiconductors. It also makes field-programmable gate arrays. It serves customers in industrial, automotive, consumer, aerospace and defense, communications and computing markets.
Microchip Stock Falls After Breakout Attempt
Microchip stock tumbled 5% in after-hours trading on the stock market today. During the regular session, MCHP stock rose 0.2% to 100.02.
Microchip stock broke out of a six-month consolidation period on Tuesday, hitting a buy point of 101.45, according to IBD MarketSmith charts. But MCHP stock closed below that buy point Tuesday.
"Our September-quarter financial results were reasonably good despite a challenging economic environment," Chief Executive Steve Sanghi said in a news release.
He added, "There is continued uncertainty in the economic environment, specifically as it relates to the U.S. and China trade dispute and hence we had limited backlog visibility from our customers and distributors to start the quarter."
While Microchip expects sales in the December quarter to fall 2% to 10% sequentially, "there are early signs that we may be at a positive inflection point," Sanghi said.
Ichor Beats Third-Quarter Targets, Guides Higher
Elsewhere in the chip sector, semiconductor equipment supplier Ichor Holdings (ICHR) delivered a beat-and-raise quarterly report late Tuesday.
The Fremont, Calif.-based company earned an adjusted 30 cents a share on sales of $154 million in the third quarter. Analysts expected Ichor earnings of 28 cents a share on sales of $152 million, Zacks said. In the year-earlier period, Ichor earned 55 cents a share on sales of $175 million.
For the fourth quarter, Ichor expects to earn an adjusted 47 cents a share on sales of $185 million. That's based on the midpoint of its guidance. Wall Street was modeling Ichor earnings of 34 cents a share on sales of $158 million in the December quarter.
Ichor makes fluid delivery subsystems for semiconductor capital equipment.
Semiconductor-Equipment Industry On The Upswing
Chief Executive Tom Rohrs signaled a recovery in the chip-equipment industry after five down quarters.
"Stronger business levels in the third quarter were driven by a combination of our market share gains, an increase in shipments for EUV (extreme ultraviolet) lithography, and importantly by the beginning of an upturn in industry spending," Rohrs said in a news release.
He added, "As we look forward to a stronger fourth quarter, we are encouraged by continued strengthening of investments in the foundry and logic sectors and the beginning of a recovery in memory capital spending — both signaling a stronger year ahead for Ichor in 2020."
Ichor stock jumped 5% in after-hours trading. During the regular session Tuesday, it climbed 1.5% to 31.44.
IBD's Electronics-Semiconductor Equipment industry group currently ranks No. 1 out of 197 groups.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor companies.
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