Atmel Corporation (ATML): This Stock Has Bottomed and Is Headed Higher

Atmel accepts the fact that initial sales of Windows 8 have been slow. However, it expects that the introduction of Haswell chips from Intel Corporation (NASDAQ:INTC) will lead to better sales of large touchscreens in the second half of the year. Moreover, Atmel could look forward to the second generation of the Microsoft Corporation (NASDAQ:MSFT) Surface as another revenue driver. While the previous Surface couldn’t do much in terms of sales, it still made up for half of Windows 8 devices sold.

Also, analysts expect that if Microsoft Corporation (NASDAQ:MSFT) ventures into the 7-9 inch tablet realm with the next Surface, which it might, then adoption of the device would increase further. Thus, Atmel Corporation (NASDAQ:ATML)’s newly found market could receive another boost if Microsoft’s latest operating system and touch devices find some traction as analysts expect.

Apart from microcontrollers, Atmel’s radio frequency (RF) and automotive business is also witnessing some momentum, as it grew 7% from the year-ago period. The company’s solutions in this business, such as ultra-low power Wi-Fi solution and high-voltage products, are gaining strength. Also, the ASIC (Application Specific Integrated Circuit) business, which declined 18% in the previous quarter, is expected to be in recovery mode this quarter onwards.

What now?

Atmel has a strong order backlog and it expects better times going ahead. This fact is hit home by Atmel Corporation (NASDAQ:ATML)’s second-quarter guidance, which calls for revenue between $339 million to $355 million, almost at the mid-point of the consensus estimate of $348 million (according to Yahoo! Finance). Its gross margin is expected to get better as well. Thus, it’s quite possible that the company has indeed bottomed, and the stock might head higher.

Its business is improving; it has some solid clients and is spreading its wings wide, and as such Atmel might get better going forward.

The article This Stock Has Bottomed and Is Headed Higher originally appeared on Fool.com and is written by Harsh Chauhan.

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