The semiconductor industry hasn’t been to kind to Atmel Corporation (NASDAQ:ATML) lately. Due to increasing commoditization of its core touch controller business, shares have declined 40% over the past 12 months. But things are beginning to get interesting. Despite a sub-par fourth-quarter report, management seems more confident that potential that’s always been attached to this company will be realized in value. While commoditization concerns are valid, the valuation is attractive. And if management is to be believed, this stock can reach double-digits.
Can new products make the difference?
As noted, there’s always been a lot of potential with this company. This is despite the Street’s love affair with QUALCOMM, Inc. (NASDAQ:QCOM) and Broadcom Corporation (NASDAQ:BRCM) and their claim in the mobile devices market. Nevertheless, Atmel’s been steadily investing in its fast-growing touch-sensing technology business.
To that end, the company recently posted a 6% year-over-year growth in the microcontroller business, marking the fourth consecutive quarter of growth. This is despite what has been a brutal chip industry. That overall revenue arrived 10% lower was not much a concern. In fact, it was a 15% improvement when compared to the year-over-year growth of Q3. Plus, when adjusted for the sale of the serial flash business, the decline was only 8%.
However, Atmel Corporation (NASDAQ:ATML) continues to be a story about touch and a renewed focus on higher-growth business. To that end, Atmel recently unveiled several new products such as the maXTouch mXT450S aimed at generating higher margins. Likewise, the company’s latest maXTouch solutions have picked up new design wins and continue to gain momentum in “non-traditional” touch devices/products such as automotive applications.
Even more impressive, the new touch controllers have a strong focus on the end-user experience, including passive stylus support. And according to Stephen Cumming, Atmel’s CFO, these investments are likely to pay good dividends this year. In a recent interview with Reuters, Cumming seems more confident thanks to increased orders from smartphone and ultrabook customers like Samsung and Hewlett-Packard Company (NYSE:HPQ).
Is there a new focus?
In the phone interview, Cumming said:
Overall, 2013 is definitely going to shape up as a better year. I do feel that our maxTouch business will grow, our core microcontroller business would grow. Our other product lines should overall be doing better.
It’s hard to say what Cumming meant by his optimism for growth. If you recall, Atmel Corporation (NASDAQ:ATML) posted a 10% decline in revenue in the recent quarter.