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Atmel junks 'devalued' bid of Microchip, ON Semi

Posted: 31 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:takeover? bid?

Atmel Corp. has reported a $4.7 million GAAP net loss for Q3 after having a profit in the same period of 2007. The company also rejected an unsolicited $2.3 billion bid to buy the company made earlier this month by Microchip Technology Inc. and ON Semiconductor Corp.

It said Atmel's board of directors unanimously rejected the offer to acquire Atmel for $5 a share in cash. The board noted that the proposal was inadequate in multiple respects like value, conditionality and complexity, and the deal is not in the best interests of Atmel's stockholders.

Atmel said its total revenue declined to $400 million in Q3, down sequentially from $421 million in Q2 and down year-to-year from $418 million in Q3 07.

Atmel's GAAP net loss was a marginal improvement over the GAAP net loss of $4.9 million in Q2 but down year-to-year from a profit of $16.6 million posted in Q3 07.

Steven Laub, Atmel's president and CEO, said Atmel's Q3 gross profit margin of 39.5 percent was the highest for the company in seven years.

Because of an ongoing restructuring plan that includes job cuts and fab resizing in Europe, Atmel said it expects to see continued improvement in its gross margins in Q4. The company is expecting that Q4 revenue will be in a range of down 3 percent to up 3 percent compared with the $400 million seen in Q3.

Analysts had come to view the bid by Microchip and ON Semi, first made public early this month, as a long shot. Craig Berger, analyst, FBR Research, said in a note circulated Tuesday that FBR continues to see the buyout as unlikely for several reasons, including Atmel management's unwillingness to sell for $5 or even $6 per share, as well as the existence of a poison pill contained within Atmel's corporate charter.

Berger added that most investors do not believe that Microchip and ON Semi would be able to acquire the financing needed for a deal.

Atmel reported a non-GAAP net income for Q3 of $42.6 million, or $0.09 cents per diluted share, up sequentially from $17.3 million or $0.04 cents per diluted share, and from $22.8 million or $0.05 cents per diluted share in the year-ago quarter.

"Atmel's GAAP numbers for the quarter covered a one-time reduction of around $19.9 million relating to an earlier announced conversion of European distributors," the company said.

- Dylan McGrath
EE Times

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