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Microchip Technology Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 11, 2013 02:07PM

Microchip Technology Inc. (MCHP) filed Quarterly Report for the period ended 2012-12-31. Microchip Technology, Inc. has a market cap of $7.05 billion; its shares were traded at around $36.36 with a P/E ratio of 34.4 and P/S ratio of 5.3. The dividend yield of Microchip Technology, Inc. stocks is 3.9%. Microchip Technology, Inc. had an annual average earning growth of 7.8% over the past 10 years. GuruFocus rated Microchip Technology, Inc. the business predictability rank of 4-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, stock appreciation rights, 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, 2012 was $45.8 million, of which $5.3 million was capitalized to inventory and $38.9 million was reflected in operating expenses. Of the $38.9 million reflected in operating expenses, $7.8 million is related to the accelerated vesting of outstanding equity awards upon the termination of certain SMSC executive officers. Total share-based compensation reflected in cost of sales during the nine months ended December 31, 2012 was $5.8 million. Total share-based compensation included in our inventory balance was $5.2 million at December 31, 2012.

Our net sales for the quarter ended December 31, 2012 were $416.0 million, an increase of 8.5% from the previous quarter's sales of $383.3 million, and an increase of 26.4% from net sales of $329.2 million in the quarter ended December 31, 2011. Our net sales for the nine months ended December 31, 2012 were $1,151.5 million, an increase of 10.3% from net sales of $1,044.3 million in the nine months ended December 31, 2011. The increases in net sales in these periods were due primarily to our acquisition of SMSC on August 2, 2012, offset in part by adverse general economic and semiconductor industry conditions. Average selling prices for our semiconductor products were up approximately 12% for the three-month period ended December 31, 2012 over the corresponding period of the previous fiscal year. Average selling prices for our

Our gross profit was $200.4 million in the three months ended December 31, 2012 and $185.5 million in the three months ended December 31, 2011. Our gross profit was $599.4 million in the nine months ended December 31, 2012 and $603.6 million in the nine months ended December 31, 2011. Gross profit as a percent of sales was 48.2% in the three months ended December 31, 2012 and 56.4% in the three months ended December 31, 2011. Gross profit as a percentage of sales was 52.1% in the nine months ended December 31, 2012 and 57.8% in the nine months ended December 31, 2011.

R&D expenses for the three months ended December 31, 2012 were $71.4 million, or 17.2% of net sales, compared to $44.3 million, or 13.4% of net sales, for the three months ended December 31, 2011. R&D expenses for the nine months ended December 31, 2012 were $184.3 million, or 16.0% of net sales, compared to $134.9 million, or 12.9% of net sales, for the nine months ended December 31, 2011. 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, 2012 were $69.4 million, or 16.7% of net sales, compared to $51.1 million, or 15.5% of net sales, for the three months ended December 31, 2011. Selling, general and administrative expenses for the nine months ended December 31, 2012 were $196.7 million, or 17.1% of net sales, compared to $158.6 million, or 15.2% of net sales, for the nine months ended December 31, 2011. 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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