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Atmel Enters in G3-PLC Alliance

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Atmel Corporation (ATML) has recently declared that it is now a part of G3-PLC Alliance to support G3-PLC Communications service. G3-PLC Alliance is a globally established organization, which is engaged in upgrading the G3-PLC technology for improving the functionality of the latest smart grid processes.

G3-PLC technology is regarded as the latest, lowest frequency, orthogonal frequency division multiplexing (:OFDM)-based narrowband powerline communications (NB-PLC) standard. Acknowledged by ITU and IEEE 1901.2 recognized standard, G3-PLC technology is considered as the first NB-PLC standard compatible with the IPv6 internet protocol. With the assistance of this technology the companies will be able to attain a low-cost smart grid processes and fulfill the requirement of its clientele.

The G3-PLC committee has selected the company given its dominance in the semiconductor market, which will help this organization to further enhance its potential. Management expressed its optimism on the association by stating that its advanced and best-in-class services would surely help ameliorating the standard of G3-PLC technology through developing the overall functionality among the smart meter and smart grid system.

Atmel is in the process of transforming itself into a purely microcontroller-based company, which it believes will augment its cost structure and unlock value. The company is focusing more on its core microcontroller business through introducing the latest products with the aim of targeting high-growth and high-margin businesses.

In the third quarter of 2012, the company reported net sales of $361 million. Even though the sales were down 24.7% year over year and 2% sequentially, it was within management’s previously provided guidance range of $357 million - $379 million. The fall in revenue was caused by the downturn in the company’s business segments except its microcontroller business.

Although Atmel is a globally renowned enterprise, it operates in an intensely competitive landscape. The company’s primary competitors include big players such as LSI Corporation (LSI) and Semiconductor Manufacturing International Corp. (SMI). LSI recently launched its latest Syncro MX-B Rack Boot Appliance to enhance the potential of the boot drives. Hence, the company has to go through rapid technological changes, evolving standards which may turn out to be costly.

The current Zacks Consensus Estimates for Atmel are 4 cents and 19 cents for fourth quarter of 2012 and for 2012, respectively. As the current challenging macroeconomic conditions persist the company continues to have a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Nevertheless, we maintain a ‘Neutral’ recommendation on the stock for the long run.

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