Atmel Corp., which has operated a semiconductor manufacturing plant in Colorado Springs since 1989, passed into the history books Monday when it was acquired by Arizona-based Microchip Technology Inc. for $3.49 billion in cash and stock.
Microchip said Monday that Atmel revenue dropped sharply in the first quarter to between $219 million and $221 million, or down more than 15 percent from the previous quarter and off more than 30 percent from the first quarter of 2015.
Microchip said its expects to report record revenue for its fourth quarter, which ended March 31, of between $552 million and $568 million, or up 1.6 percent to 4.7 percent from a year earlier, with operating profits for the January-to-March period flat at 65-69 cents a share, compared with 68 cents a year ago.
"The performance of Atmel since we engaged in discussions in August of 2015 has been disappointing," Microchip CEO Steve Sanghi said in a news release issued after the deal closed. "We believe that the large drop in Atmel revenue in the March 2016 quarter is likely the result of an inventory correction in the distribution channel as distributors reduced inventory levels, overall weak business conditions, and concerns on the part of distributors surrounding the impact of the sale of Atmel to Microchip."
The revenue decline doesn't "fundamentally change" Atmel's value to Microchip, Sanghi said. "We understand Atmel's business well and we plan to rapidly integrate Atmel into Microchip, grow its sales, improve its gross (profit) margin percentage, bring down operating expenses and improve profitability."
Atmel shareholders on Friday overwhelmingly approved the transaction, which topped an earlier deal with London-based Dialog Semiconductor that the British company had declined to top. California-based Atmel had been seeking a bidder for the company since May, when its CEO announced plans to retire.
Atmel's Colorado Springs plant, which employs about 1,000 people, is expected to continue operating under Microchip.
The company's chief financial officer said last month that Microchip doesn't plan "changes" in the city's last remaining semiconductor manufacturing facility, though he said further evaluation was needed. Microchip expects to wring $200 million in savings over four years from Atmel, much of which will come from shifting final testing of Atmel's chips in-house to Microchip from subcontractors, who complete 85 percent of the testing on Atmel's products.
The combined company would be the world's third-largest producer of microcontrollers and employ more than 14,000 people, including Atmel's plant in Colorado Springs and Microchip's manufacturing facility in The Philippines.
After the deal is completed, Microchip estimates it will generate $3.25 billion annually in revenue.
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