LOS ANGELES (AP) ? Shares of Microchip Technology Inc. fell Friday after the company cut its guidance for its earnings for the quarter through September, saying an expected uptick in demand due to the Christmas holiday had not materialized and a weak global economy continued to be a headwind.
THE SPARK: Microchip Technology said Thursday that it expects second-quarter adjusted net income of 45 to 47 cents per share, down from the 50 to 54 cents per share it forecast back in August.
Analysts polled by FactSet expected adjusted net income of 52 cents per share.
It also said sales were seen falling 11 percent from a year ago to $340.6 million, down from a previous forecast of $352.0 million to $370.8 million.
Analysts had expected $359.6 million in revenue.
THE BIG PICTURE: Chandler, Ariz.-based Microchip Technology creates chip products for touch controllers from set-top boxes to washers and dryers. A weak outlook suggests other chipmakers are also not doing well.
THE ANALYSIS: This is the second negative disappointing forecast this quarter, and it coincides with double forecast downgrades from two other chipmaking competitors, Fairchild Semiconductor International Inc., and Texas Instruments Inc., noted Jefferies analyst Mark Lipacis
But he said in a research note that those two companies’ shares did better following their second downgrade, and reiterated his “buy” rating on Microchip Technology with a $38 price target.
SHARE ACTION: Microchip shares dropped $1.78, or 5 percent, to $33.53 in midday trading Friday. Shares are down from a 52-week peak of $41.50 in May, but above the low of $29.30 hit in August.