Microchip Technology Stock Gains On Uplifting Forecast

Microchip Technology Inc. (NASDAQ:MCHP) shares are trading higher premarket on Friday after the company reported fourth-quarter results after Thursday’s closing bell.

Revenue fell 26.8% year over year (Y/Y) to $970.5 million, beating the analyst consensus estimate of $962.8 million.

In the quarter, the company achieved a book-to-bill ratio greater than one for the first time in almost three years.

Furthermore, the company stated that bookings in April surpassed the levels of any single month within that March quarter.

Adjusted EPS of 11 cents was in line with the analyst consensus estimate.

Also Read: Nvidia, Broadcom Lead Fund Manager Buys Even As Semiconductor Sector Cools: Analysts

Dividend: The company declared a quarterly cash dividend of 45.5 cents per share, payable on June 5, 2025, to stockholders of record as of May 22, 2025.

The company returned $1.066 billion to shareholders in the year through dividends and share repurchases.

Steve Sanghi, Microchip’s CEO and president said, “The decisive actions we have taken under our nine-point-plan are enhancing our operational capabilities through more efficient manufacturing, improving inventory management, and a renewed strategic focus.”

“A key highlight this quarter has been our inventory reduction strategy, with overall inventory dollars down $62.8 million, distribution inventory days reduced by 4 days to 33 days, and inventory days on our balance sheet decreased by 15 days from levels at December 31, 2024. We expect even more substantial inventory reduction in the June quarter as our manufacturing optimization actions are near completion.”

Eric Bjornholt, Microchip’s Chief Financial Officer, added, “During the quarter, we executed multiple financial actions that strengthened our balance sheet. These included reducing our total net debt by roughly $1.30 billion with a mandatory convertible preferred offering. We also amended and extended our revolving line of credit with more favorable terms and financial flexibility.”

Outlook: Microchip sees first-quarter adjusted EPS of 18 to 26 cents vs. consensus of 16 cents and sales of $1.020 billion to $1.070 billion vs. street view of $987.62 million.

Investors can gain exposure to the stock via Tidal Trust II YieldMax Semiconductor Portfolio Option Income ETF (NYSE:CHPY) and First Trust S&P 500 Diversified Dividend Aristocrats ETF (NASDAQ:KNGZ).

Price Action: MCHP shares are up 8.00% to $53.07 premarket at the last check on Friday.

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