Atmel Corporation (NASDAQ:ATML) has been trying to reignite its growth by attempting to ride the success of smartphones, tablets and touch-enabled PCs based on Microsoft‘s Windows 8. The company has been counting on its touch controllers/sensors to expand its core micro-controller business.
Not impressive
Atmel Corporation (NASDAQ:ATML) reported net sales of $347.8 million, which was a 6% decline from last year, marginally beating consensus estimates of $347 million. One of the main reasons for lower revenue was that Samsung’s Galaxy S4 did not sell as well as expected. The other reason was the slow adoption of Windows 8-based systems and devices.
In the tablet segment, Microsoft’s Windows RT has been a failure, and Windows Surface Pro also didn’t move as much as the company would have liked it to. All of these factors have contributed to declining revenue for Atmel Corporation (NASDAQ:ATML).
However, the micro-controller segment grew 7%, which is good because otherwise the results would have been dismal. Also, adjusted earnings went south versus last year from $0.08 per share to $0.06 per share.
Will it get better?
Atmel Corporation (NASDAQ:ATML) is banking largely on the touch controllers/sensors, and it’s optimistic about the growth of Windows 8. This however, so far has been a risky turf as the whole idea of designing an OS with “convergence” in mind hasn’t caused a stir in the market so far. The only positive takeaway is an order win from Lenovo, which so far has been on sidelines as far as touch-enabled PC/notebooks are concerned. If it joins the fray, it could come in as a breather for Atmel as far as its touch controllers/sensors segment is concerned. It has also seen design wins for its maxTouch controller for touch-enabled PCs from Asus and Sony.
Atmel Corporation (NASDAQ:ATML) is looking at revenue between $348 million and $365 million in the third quarter, which at the midpoint is below the consensus estimate of $363 million. So even if it manages to get to the midpoint, it would still report a decline in revenue on a year-over-year basis.
Sales of touch-enabled PC’s haven’t really taken off so far. Some even say that Windows 8 is a failure. This could be a damper for Atmel Corporation (NASDAQ:ATML) and is something that might not go down too well with investors. The company cannot expect miraculous growth in its traditional micro-controllers, as there are other players in the market, like Texas Instruments, Microchip Technology Inc. (NASDAQ:MCHP) plus, reliance on PCs isn’t a good idea these days.
Strong competitors
In the “touch” controllers/sensors segment, Atmel has Synaptics, Incorporated (NASDAQ:SYNA) as competition, and in the micro-controllers segment it has Microchip to contend with.
Synaptics, Incorporated (NASDAQ:SYNA) declared its 4Q 2013 results this month, and its numbers indicate that it’s on a growth path. It beat the Street expectations hands down, posting net income that more than tripled from last year. In the reported quarter, revenue grew 67% to close at $230.2 million, and this beat consensus estimates of $220.8 million. Net income in the reported quarter was $1.29 per share, up from $0.36 per share a year ago.
