Robert DeFrancesco’s

TechStockProspector.com
December 12, 2010

Atmel (ATML) Ramps Growth in Microcontrollers

52-week high/low: $12.66/$4.12

Market cap: $5.69 billion
Estimate 2011 revenue: $1.83 billion

It has been a good year for shareholders of Atmel (ATML, $12.41), a provider of
microcontrollers and capacitive touch solutions. The stock ended 2009 at $4.61,
which translates into a gain of 169% YTD. Atmel shares traded below $7 as recently
as the middle of September.

In Q3, revenue rose 40% year over year to $444.3 million, coming in well above the
consensus of $427.6 million. Microcontroller revenue was a record $255.5 million
(up 29% sequentially), accounting for 57.5% of total revenue, up from a 24%
contribution in 2006. Per-share earnings of 18 cents topped the consensus by six
cents.

Gross margin increased to 47% (the highest level achieved since Q4 of 1996) from
41% in Q2. The sequential increase was the result of the sale of certain
manufacturing operations, increased factory utilization rates and a favorable mix of
higher margin microcontroller products.

Introduced in Q2 2009, Atmel’s maXTouch multi-touch controller for smartphones

and tablets has been a bit hit right out of the gate, and is on an annual revenue run
rate of $140 million. The maXTouch solution powers eight of the handsets on the PC
World list of 10 top smartphones. Customers include Samsung, Nokia, HTC and
Motorola. For 2011, Atmel will push its touch technology further into the tablet
segment. The company’s other significant growth areas: smart energy (metering),
industrial applications and point-of-sale terminals.

For Q4, Atmel’s revenue guidance of $425 million to $442 million was above the
consensus of $397 million. The 2010 consensus revenue estimate stands at $1.62
billion.

Atmel ended Q3 with $84 million in long-term debt and $597.4 million in
cash/investments.
In Q3, Ameriprise Financial (J&W Seligman) was the biggest Atmel buyer, picking up
7.88 million shares. The firm now owns 18 million shares worth $224 million and is
the #5 holder. Systematic Financial and Westfield Capital opened new positions of
5.5 million shares and 3.6 million shares, respectively. Other new buyers in Q3:
Cavalry Management (2.1 million shares), Fuller & Thaler (1.7 million shares), Tygh
Capital (1.6 million shares), Copper Rock Capital (1.3 million shares) and McKinley
Capital (1.2 million shares).

Columbia Wanger Asset Management increased it position by a third with the

purchase of 2.9 million shares, while #2 holder RS Investment Management upped
its stake by 7% with the purchase of 2.3 million shares and now owns 34.9 million
shares. Janus is by far the #1 holder with 60.9 million shares, representing 13.3% of
the outstanding shares. Atmel CEO Steve Laub owns 4.8 million shares.

Rob DeFrancesco is a former senior writer with Louis Rukeyser’s Wall Street.

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