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April 8, 2020, 6:07 p.m. EDT

Microchip sees temporary coronavirus sales rise, cuts costs

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By Wallace Witkowski

MCHP

Microchip Technology Inc. /zigman2/quotes/208326291/composite MCHP +6.88% said it is cutting costs even while sales rise given the uncertainty and economic volatility resulting from the COVID-19 pandemic. The chip maker said it expects quarterly revenue to rise 3% sequentially, up from a previous forecast of flat revenue. Analysts surveyed by FactSet had forecast quarterly revenue of $1.29 billion, or a sequential decline of 3.3%. "Microchip, however, believes that the strength in bookings may be a result of customer concerns about supply chain disruptions due to the COVID-19 virus," the company said in a statement. "With economies around the world contracting rapidly, with millions of people getting laid off and with customer factory closures due to 'shelter in place' ordinances in various countries, we believe that product demand is likely to weaken significantly." The company said senior executives will take a 20% salary cut with non-factory employees taking a 10% cut. Some factory workers will have to take salary cuts with "others taking rotating time off depending on the factory loading levels for various locations," the company said. Board-member compensation is being reduced by 20%, the company said. Microchip shares rose 2.5% after hours, following an 8.4% rise to finish the regular session at $79.52.

/zigman2/quotes/208326291/composite
US : U.S.: Nasdaq
$ 93.85
+6.04 +6.88%
Volume: 5.16M
May 26, 2020 4:00p
P/E Ratio
42.29
Dividend Yield
1.57%
Market Cap
$21.54 billion
Rev. per Employee
$352,817
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