Orange County Business Journal

Microsemi: Thailand Flood to Hit Earnings This Quarter

Chris Casacchia Thursday, November 10, 2011

Shares of Microsemi Corp. fell Thursday in extended trading after the Aliso Viejo chipmaker provided a profit outlook in the current quarter below Wall Street expectations amid ongoing concerns of its Thailand operations.

Investors sent shares of Microsemi down nearly 1.5% in afterhours trading to a market value of about $1.5 billion.

In the current quarter, Microsemi expects “to feel the effects of the devastating floods in Thailand and the uncertain macroeconomic conditions worldwide,” according to Chief Executive James Peterson.

Ongoing concerns at its Thailand operations prompted the company to give a profit outlook for the current quarter well below analysts’ consensus.

Microsemi projects a profit between $33 million and $36.4 million.

Wall Street had forecast a profit of about $46 million.

Sales in the December quarter are projected to increase between $238 million and $246 million.

Analysts on average forecast sales of nearly $229 million in the current quarter.

The dreary profit outlook came after the company reported revenue and profits in the September quarter in line with Wall Street expectations.

Microsemi posted revenue of $227.3 million, up 50% from a year earlier.

Analysts on average had forecast revenue of about $226 million.

The company reported a profit of $45.6 million, up 58% from a year ago and in line with Wall Street estimates.

During the recently ended quarter, Microsemi concluded its $633 million buy of Canadian chipmaker Zarlink Semiconductor Inc., finalizing a rare hostile takeover.

The Zarlink buy puts Microsemi on a clear path to reaching its goal of $1 billion in annual revenue and joining the upper ranks of the mixed-signal chip market.

Microsemi now is poised to challenge Newport Beach-based Jazz Semiconductor Inc., part of Israel’s Tower Semiconductor Ltd., for the No. 2 position among local chipmakers.

Irvine-based Broadcom Corp., with about $6.8 billion in annual revenue, is the biggest local chipmaker.

Microsemi was forced to shut down two plants in Thailand in the past month as widespread flooding affected the capital of Bangkok and surrounding areas.

Investors have braced for a revenue and profit hit in the current and coming quarters, as company executives have headed warnings of the impact.

Microsemi is one of several local companies that have suffered disruptions to operations in Thailand, where the combination of a heavy monsoon season and typhoons has caused one of the worst floods in decades.