Microchip Technology Inc. MCHP shares fell in the extended session Thursday after the computer components maker reported a slight beat on earnings and its outlook was in-line with Street expectations. Microchip shares dropped 10% after hours, following a 1.5% decline in the regular session to close at $458.93. The company reported fourth-quarter net income of $604 million, or $1.09 a share, compared with $437.9 million, or 77 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.64 a share, compared with $1.35 a share in the year-ago period. Revenue rose to $2.23 billion from $1.84 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of $1.62 a share on revenue just below $2.23 billion. Microchip forecast fiscal first-quarter adjusted earnings between $1.63 to $1.65 a share on revenue of $2.26 billion to $2.32 billion. Analysts had estimated $1.64 a share on revenue of $2.26 billion. “During the March quarter, we took further actions to position ourselves for a soft landing as lead times continue to improve for many of our products. At the request of customers, we were able to reschedule significant amounts of backlog to later quarters to help customers with their inventory positions, which resulted in building inventory on our balance sheet,” said Ganesh Moorthy, Microchip chief executive, in a statement. “Given our very long product life cycles, we see very little obsolescence risk with the higher inventory balances and we believe we are well-positioned to respond to growth when the macro environment strengthens.” Microchip expects inventory days in the June 2023 quarter to ease a bit within a range of 159 to 164 days, compared to 169 days at the end of March. on March 31. “Our actual inventory level will depend on the inventory that our distributors decide to hold to support their customers, overall demand for our products, and our production levels,” the company said in a statement. Microchip also announced a 39% hike to its quarterly dividend to 38.3 cents per share, up 38.8% from the year ago quarter. The dividend is payable on June 5 to shareholders of record on May 22.
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