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September 29, 2011
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Atmel Corporation (ATML) recently signed a definitive agreement to acquire privately-held Advanced Digital Design, S.A. (ADD Semiconductor).
Based in Zaragoza, Spain, Atmel develops power line communication solutions.
With this acquisition, Atmel will acquire a portfolio of innovative products and a team of technical experts focused on signal processing and power line communications.
ADD Semiconductor specializes in the design of system-on-chip solutions, which enable narrow-band data communication across existing electric power lines. ADD Semiconductor products are targeted at the lighting, building automation and solar infrastructure markets along with supporting a number of advanced meter infrastructure pilots in Europe.
Management stated that the acquisition complements Atmel's existing smart energy product portfolio and will better position the company in the growing smart meter, energy management, home and building automation markets.
The acquisition will close next month and have no material impact on the company's results in 2011.
Last month, Atmel reported revenues of $487.6 million in the second quarter of 2011, up 22% year over year and up 4% sequentially, which was at the high-end of the company’s guidance. Excluding the impact of the divestiture of the Smart Card business, revenues grew 31% year over year.
Net income came in at $90.9 million or $0.19 per diluted share, compared to a net income of $74.6 million or $0.16 in the previous quarter and a net loss of $36.4 million or $0.08 in the second quarter of 2010, in line with the Zacks Consensus Estimate.
The company has a growing microcontrollers business that is expected to contribute to the company's top-line growth going forward. However, the guidance provided by management was slightly weak due to softness in the industrial market, the largest vertical within microcontrollers.
The company saw softness in the industrial markets toward the end of the second quarter, and the business environment hasn’t improved much as customers rebalance their inventory.
We continue to maintain a Neutral recommendation on Atmel. We currently have a Zacks #2 Rank on the company, which translates into a short-term rating of Buy as we expect the company to beat our expectations in the upcoming quarter.
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