Microchip Technology Inc. (NASDAQ: MCHP) stock rose 4.47% on 6th November, 2020 (as of 10:35 am GMT-5; Source: Google finance) after the company posted better than expected results for the second quarter of FY 21. In the September quarter, the company saw the automotive, industrial and consumer home appliance markets start their recovery. Medical devices for elective procedures which experienced a slow-down in the June quarter as individuals and hospitals delayed elective procedures, also started their recovery in the September quarter. As anticipated, the company saw the work from home related markets of computing and data center, as well as medical devices for hospitals, revert to more normal demand patterns as the increase the company saw in the June quarter dissipated. In general, enterprise demand remained weak as most businesses remain predominantly with work from home policies, thus deferring enterprise spending for the office environment. Further, during the September quarter the company began to experience rising constraints in the supply chain on back of the confluence of a number of factors. Despite these constraints, the operations team executed extremely well to meet the strong demand the company saw which enabled the company to achieve strong results. The supply chain constraints are still continuing into the December quarter.
MCHP in the second quarter of FY 21 has reported the adjusted earnings per share of $1.56, beating the analysts’ estimates for the adjusted earnings per share of $1.42, according to the Zacks Consensus Estimate. The company had reported 2.1 percent fall in the adjusted revenue to $1.31 billion in the second quarter of FY 21, beating the analysts’ estimates for revenue by 4.06%. The company delivered outstanding non-GAAP gross margin of 62.2% and non-GAAP operating margin of 39.2%.
Additionally, the company has declared a quarterly cash dividend on its common stock of 36.85 cents per share, payable on December 4, 2020 to stockholders of record on November 20, 2020.
The company has reaffirmed the updated guidance provided on September 9, 2020 was for net sales to be down between 2% and 6% sequentially with an unchanged mid-point of down 4.0%. The company has reaffirmed the updated guidance provided on September 9, 2020 was for Non-GAAP EPS to be in the range of $1.36 to $1.46 per diluted share.
Meanwhile, the company announced that its long serving CEO Steve Sanghi will transition to an Executive Chair role effective March 1, 2021. Microchip’s current President, Ganesh Moorthy, will step into the role of President and CEO effective March 1, 2021. Mr. Moorthy will also join the Board of Directors effective January 4, 2021.