Atmel 1Q Profit Drops 38%; $200 Million Added To Buyback Program
05/02/2012| 04:36pm US/Eastern
Atmel Corp.'s (>> Atmel Corporation) first-quarter profit dropped by a less-than-expected 38% as the chip maker's sales appeared to bottom out, prompting an upbeat tone from its chief executive.
The company also added $200 million to its stock-buyback program on top of its existing $500 million authorization, of which the company exercised about $489.4 million worth of common stock.
Atmel's reported earnings have deteriorated over the past three quarters as many of its customers work through inventory built up during a broader slump in the semiconductor industry last year. The company warned in February its top line would again slip amid weaker demand for memory chips as well as application-specific integrated circuits, which are used in the defense and avionics industries.
Many chip makers, including Atmel, have said the sector reached its trough earlier this year, citing the volume of new orders. Atmel is particularly well-positioned to benefit from growing demand for the hardware underpinning touchscreens. Demand for the screens is surging after Apple Inc. (AAPL) popularized them with its iPhones and iPads.
"As we predicted, our business bottomed during the first quarter, and we are well positioned to capitalize on the improving industry environment," President and Chief Executive Steve Laub said.
The latest results also benefited from the release of reserves related to a previously established foreign-government grant.
Atmel reported a profit of $20.4 million, or 5 cents a share, down from $74.5 million, or 16 cents a share, a year earlier. Excluding stock-based compensation costs, earlier restructuring charges and other adjustments, per-share earnings dropped to 8 cents from 26 cents. Analysts polled by Thomson Reuters were looking for a 4-cent profit.
Revenue fell 22% to $357.8 million, in line with the company's downbeat February forecast of $341.4 million to $360.6 million.
Gross margin narrowed to 42.6% from 51%.
Shares were up a penny at $9 in after-hours trading. The stock has climbed 11% so far this year.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; andrew.fitzGerald@dowjones.com