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Microchip Technology Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 6, 2012 11:38AM

Microchip Technology Inc. (MCHP) filed Quarterly Report for the period ended 2011-12-31. Microchip Technology Inc. has a market cap of $7.34 billion; its shares were traded at around $38.42 with a P/E ratio of 21.11 and P/S ratio of 4.94. The dividend yield of Microchip Technology Inc. stocks is 3.62%. Microchip Technology Inc. had an annual average earning growth of 12% over the past 10 years. GuruFocus rated Microchip Technology Inc. the business predictability rank of 3-star.



Highlight of Business Operations:

We measure fair value and recognize compensation expense for all share-based payment awards, including grants of employee stock options, RSUs and employee stock purchase rights, to be recognized in our financial statements based on their respective grant date fair values. Total share-based compensation during the nine months ended December 31, 2011 was $29.2 million, of which $24.1 million was reflected in operating expenses. Total share-based compensation reflected in cost of sales during the nine months ended December 31, 2011 was $4.4 million. Total share-based compensation included in our inventory balance was $4.1 million at December 31, 2011.

Our net sales for the quarter ended December 31, 2011 were $329.2 million, a decrease of 3.4% from the previous quarter's sales of $340.6 million, and a decrease of 10.5% from net sales of $367.8 million in the quarter ended December 31, 2010. Our net sales for the nine months ended December 31, 2011 were $1,044.3 million, a decrease of 5.7% from net sales of $1,107.2 million in the nine months ended December 31, 2010. The decreases in net sales for these periods were due primarily to general economic and semiconductor industry conditions. Average selling prices for our semiconductor products were down approximately 4% for the three-month period ended December 31, 2011 over the corresponding period of the previous fiscal year. The average selling prices for our semiconductor products were essentially flat for the nine-month period ended December 31, 2011 over the corresponding period of the previous fiscal year. The number of units of our semiconductor products sold was down approximately 9% for the three-month period ended December 31, 2011, and down approximately 9% for the nine-month period ended December 31, 2011 over the corresponding periods of the previous fiscal year.

Our gross profit was $183.8 million in the three months ended December 31, 2011 and $216.4 million in the three months ended December 31, 2010. Our gross profit was $598.5 million in the nine months ended December 31, 2011 and $648.8 million in the nine months ended December 31, 2010. Gross profit as a percent of sales was 55.8% in the three months ended December 31, 2011 and 58.8% in the three months ended December 31, 2010. Gross profit as a percentage of sales was 57.3% in the nine months ended December 31, 2011 and 58.6% in the nine months ended December 31, 2010.

R&D expenses for the three months ended December 31, 2011 were $44.3 million, or 13.4% of net sales, compared to $42.2 million, or 11.5% of net sales, for the three months ended December 31, 2010. R&D expenses for the nine months ended December 31, 2011 were $134.9 million, or 12.9% of net sales, compared to $126.4 million, or 11.4% of net sales, for the nine months ended December 31, 2010. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. R&D costs are expensed as incurred. Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives. R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.

Selling, general and administrative expenses for the three months ended December 31, 2011 were $52.1 million, or 15.8% of net sales, compared to $56.1 million, or 15.2% of net sales, for the three months ended December 31, 2010. Selling, general and administrative expenses for the nine months ended December 31, 2011 were $161.6 million, or 15.5% of net sales, compared to $170.9 million, or 15.4% of net sales, for the nine months ended December 31, 2010. Selling, general and administrative expenses include salary and other expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses. Selling, general and administrative expenses also include costs related to our direct sales force and field applications engineers who work in sales offices worldwide to stimulate demand by assisting customers in the selection and use of our products.

Read the The complete Report



Stocks Discussed: MCHP,
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