Microchip Technology Shares Plunged: What You Need to Know (MCHP)

Microchip Technology Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Microchip Technology (Nasdaq: MCHP ) dropped 14% in intraday trading today after it lowered guidance for the just-ended quarter and an analyst downgraded the stock.

So what: For its first quarter of fiscal 2012, which ended on June 30, management expects a sequential net sales decline of about 1.5%, non-GAAP EPS of $0.53 to $0.55, and GAAP EPS of $0.47 to $0.49. On May 5 it had guided to a sequential net sales increase of 1% to 6%, non-GAAP EPS of $0.58 to $0.62, and GAAP EPS of $0.52 to $0.55.

Now what: Management blamed the disappointment on several factors, including automotive sector weakness stemming from the tragedy in Japan, consumer weakness stemming from high gas prices and unemployment, and weak purchases from multiple large computer sector customers. The press release noted that the company continues to "see excellent design win traction in our microcontroller and analog product lines," suggesting it remains competitive in those areas. Nonetheless, the company said it is "cautiously modeling" its September quarter. Caris & Co. downgraded its rating on the stock to average from buy, while JPMorgan cut its price target from $36 to $29, maintaining its neutral rating.

Interested in more info on Microchip? Add it to your watchlist by clicking here.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.