Goldman Sachs Neutral On Microchip Technology

Goldman Sachs has a Neutral rating and a $32 price target on shares of Microchip Technology Inc. MCHP. In a note to clients, Goldman Sachs writes, "Microchip negatively pre-announced 2QCY11 results in an unscheduled update after the market close on July 11. Microchip now expects sales to be down 1.5% qoq ($374.5 mn), below prior guidance of up 1% to 6% qoq and the Street at $394 mn. The non-GAAP gross margin is now expected to be 59.3%-59.7%, with opex 24.75%-25.25% and EPS (ex ESOs) of $0.53-$0.55 vs. $0.58-$0.62 previously. Microchip cited a sharp decline in automotive revenues due in part to supply issues related to the earthquake in Japan. The company also saw an inventory correction after accelerated purchases in March as well as weakness in its consumer and computing businesses. Management guided September revenues down low- to mid-single digits, with gross margin and opex flat as a percentage of sales." Shares of MCHP are down $2.88 in pre-market trading to $34.60, a loss of almost 8%.