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Atmel Corporation (ATML), Microsoft Corporation (MSFT), Apple Inc. (AAPL): Why Now Is a Good Time to Sell This Stock

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Atmel Corporation (ATML)Semiconductor company Atmel Corporation (NASDAQ:ATML) is well-known for two things — the first is making microcontrollers and the second is inconsistency. However, shares have been up close to 30% so far this year as its performance has alternated between the bad and then, the good. Investors’ faith and management helped the stock appreciate this year.

But, true to its character, Atmel Corporation (NASDAQ:ATML) yet again proved that it cannot stick to one path. In its recently released second quarter results, Atmel beat revenue estimates by a hair and matched earnings expectations, but failed to capitalize on the decent results by offering a shallow outlook.

Inconsistency continues

The results were also not impressive if we go for year-over-year comparisons. Atmel Corporation (NASDAQ:ATML)’s revenue has been on a decline and it fell 5.5% from last year to $348 million in the quarter. Similarly, adjusted earnings per share also came in lower at $0.06 from $0.08 last year. Add to that a shallow outlook, which Atmel blames on its largest customer ramping down production of its flagship product (think Galaxy S4), and it looks like investors have a good reason to be disappointed now.

Atmel Corporation (NASDAQ:ATML) is looking at revenue between $348 million and $365 million in the third quarter, below the consensus estimate of $363 million. If Atmel does manage to achieve this estimate, it would again report a decline in sales on a year-over-year basis.

This means the company isn’t expecting much growth on a sequential basis either. But, with sales of the Samsung Galaxy S4, for which Atmel Corporation (NASDAQ:ATML) had supplied its touchscreen controller tapering off, one could have expected such an outlook.

What gives?

As Reuters reports, analysts have reduced its estimates for sales of the S4 by 30% as the company is finding it difficult to move more units, leading to overstocking of inventory and forcing Samsung to cut orders. The production ramp up of the Galaxy S4 was the reason why Atmel was able to do well earlier in the year, but with Samsung’s primary weapon out of the game, the going might prove to be a bit more difficult.

But, as always, management is optimistic. The fact that it landed a spot inside the Galaxy S4 Mini and the Galaxy Tab 3 should help its revenue going forward. In addition, Atmel has been waiting on the success of Microsoft Corporation (NASDAQ:MSFT)’s Windows 8. CEO Steven Laub stated over the previous conference call that Windows 8-based systems are moving slowly.

So, I’m not sure of the numerous design wins with respect to Windows 8 models that Atmel boasted of over the previous conference call. Microsoft Corporation (NASDAQ:MSFT) is having difficulty in moving its products and has even resorted to offering kickbacks to resellers who manage to sell certain selected Windows 8 touch-enabled devices, as Digital Trends reports.

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