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MCHP Nasdaq· Microchip Technology Incorporated
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MCHP Nasdaq· Microchip Technology Incorporated
Earnings report Q4 2023

MCHP Reports Decrease in Revenue in Latest Quarter

Segments of Revenue

MCHP's net sales for the three months ended December 31, 2023, accounted for 100% of the total revenue. However, the company experienced a decline in revenue compared to the same period in the previous year.

Strengths

Despite the decrease in revenue, MCHP's gross profit margin remained relatively stable at 63.4% for the latest quarter. This indicates the company's ability to maintain profitability despite the challenging market conditions. Additionally, MCHP's operating income stood at 30.0% of net sales, demonstrating efficient cost management.

Challenges

MCHP faced challenges in the form of push-out or cancel backlog, which negatively impacted revenue in the fourth quarter of fiscal 2023 and the first nine months of fiscal 2024. The company attributes this to the slowing macroeconomic environment and increased inventory. Furthermore, MCHP has paused most of its factory expansion actions and reduced planned capital investments through fiscal 2025, reflecting the cautious approach taken due to the uncertain business environment.

Noteworthy

One noteworthy aspect of MCHP's performance is its dependence on distributors to serve its end customers. Sales to distributors accounted for approximately 48% of net sales in the first nine months of fiscal 2024. However, the company has discontinued its original Preferred Supply Program and LTSAs, except for certain orders placed before February 1, 2024.

Summary

MCHP reported a decrease in revenue for the latest quarter, primarily due to push-out or cancel backlog and the challenging macroeconomic environment. However, the company demonstrated strength in maintaining a stable gross profit margin and efficient cost management. MCHP's cautious approach, including pausing factory expansion and reducing planned capital investments, reflects its response to the uncertain business environment. The company's dependence on distributors for sales remains a key aspect to monitor moving forward.

Source documents

Form 10-Q  filed on Feb 01, 2024
113 pages scanned

Reference data

Company financials Q4 revenue 1.77B
Analyst estimates Q4 EPS missed by -33.38%
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