By Denny Jacob
Microchip Technology posted a decline in sales in the latest quarter as customers worked to limit their inventory levels.
The semiconductor products provider logged net income of $419.2 million, or 77 cents a share, for the third quarter ended Dec. 31, down from $580.3 million, or $1.04 a share, a year earlier. Adjusted earnings were $1.08 a share, above analysts’ estimates of $1.04 a share.
Sales declined to $1.77 billion from $2.17 billion, matching expectations of analysts polled by FactSet.
Chief Executive Ganesh Moorthy said sales declined nearly 22% sequentially as weak demand drove customers to cut shipments and extend shutdowns to protect their inventory levels, which prevented the company from fulfilling previously planned shipments from its backlog.
“We are taking steps to limit discretionary spending and tightly manage inventory levels during this downcycle. As a result, we intend to have two-week shutdowns in our large wafer fabrication facilities in each of the March and June quarters and reduced activity in many of our other factories, resulting in underutilization charges,” Moorthy said.
For the fourth quarter, Microchip guided for sales between $1.23 billion and $1.43 billion as well as adjusted earnings per-share between 46 cents and 68 cents. Analysts polled by FactSet expected sales of $1.66 billion and adjusted earnings of 92 cents in the fourth quarter.
Write to Denny Jacob at denny.jacob@wsj.com