Atmel's Adjusted Earnings Beat

Zacks

Atmel Corporation (ATML), a leading semiconductor manufacturer, reported a net loss of $47.7 million or 11 cents per share in first quarter 2013 compared to a net income of $20.4 million or 5 cents per share in the year-earlier quarter. The year-over-year decrease in earnings was primarily due to charges incurred primarily for restructuring activities and other legal-related settlement charges.

Excluding one-time items, non-GAAP net income for the first quarter of 2013 was $13.6 million or 3 cents per share compared with non-GAAP net income of $35.3 million or 8 cents per share in the year-ago quarter. The adjusted earnings for the reported quarter outpaced the Zacks Consensus Estimate of a loss of 1 cent.

The company reported net sales of $329.1 million, down 8% year over year. Net sales in the reported quarter, however, beat the Zacks Consensus Estimate of $322 million.

GAAP gross margin was 39.9% in the reported quarter, compared to 42.6% in the prior-year period. Non-GAAP gross margin was 40.5% in the first quarter of 2013 versus 43.2% in the first quarter of 2012.

During the reported quarter, Atmel's low-power sensor hub solution was selected by Samsung for the Galaxy S4 smartphone. The company also expanded its smart energy portfolio with the acquisition of smart metering product lines and technology of Integrated Device Technology, Inc. (IDTI)

Additionally, the company introduced other new products and launched some new hardware and software tools to further simplify microcontroller design process.

Share Repurchase

As part of its share repurchase program, Atmel bought back 2.4 million shares at an average price of $6.52 each during the reported quarter.

Balance Sheet and Cash Flows

The company ended the quarter with cash and cash equivalents of $242.7 million, down from $293.4 million as of Dec 31, 2012. Cash utilized in operations totaled $12.0 million for the reported quarter versus $60.6 million provided by operations in first quarter 2012. The decrease in cash balance was driven by payments for two acquisitions, a prepayment made to Conductive Inject Technologies to support XSense production, timing of vendor payables, customer receivables and common stock repurchases.

Moving Forward

Atmel is continuously upgrading its product portfolio to fuel growth and thwart intense competition and price wars from rivals. Moving ahead, the company expects improving business conditions, a healthier backlog, and strong product portfolio to drive its earnings. The company continues with its cost-reduction efforts to manage its operating expenses and to improve its profitability.

Atmel currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth considering in the industry are Anadigics Inc (ANAD) and Semiconductor Manufacturing International  Corp (SMI) , each carrying a Zacks Rank #2 (Buy).
 

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