Atmel Corporation (ATML), Microchip Technology Inc. (MCHP), Synaptics, Incorporated (SYNA): This Chipmaker Is Not a Good Investment

In order to drive sustainable growth, the company is positioning itself as a leader in the smartphone as well as broader touchscreen markets. It has a strong presence in emerging economies like China. The company is confident of revenue growth from tablets and large touchscreen products, and is equally sure of seeing yet another year of strong annual top-line growth going forward.

Microchip Technology Inc. (NASDAQ:MCHP) recently declared its quarterly results, posting revenue of $462.8 million, up 31% from last year, and beating consensus estimates of $455 million. It also reported record growth in 16/32-bit micro-controllers, with 8-bit controllers just missing record sales. The company is confident that in the coming quarter even-8 bit micro-controllers will break all records in terms of revenue.

The long-term goal of the company is achieving a gross margin of about 60% and an operating profit of about 32.5%. It has a strong track record of paying dividends and has a yield of 3.5%, which makes it an ideal choice for both dividend and growth-seeking investors.

Microchip has a diverse product mix, which reduces the risks of being largely dependent on a given market segment. Its exposure to the volatile mobile market is not as big as Atmel’s, and hence it is better positioned in dealing with market uncertainties.

Conclusion

Atmel has been consistently inconsistent. The mobile-computing market for higher end devices seems to have plateaued, at least for the time being, and this has hurt Atmel as the Galaxy S4 didn’t sell as well as expected. The company’s reliance on Windows PCs is not a welcome sign either. So all in all, Atmel doesn’t look like a stock where you should put your money.

The article This Chipmaker Is Not a Good Investment originally appeared on Fool.com and is written by Amal Singh.

Amal Singh has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Amal is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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