Banc of America Cuts Microchip Outlook

Analyst Douglas Lee trimmed estimates, but noted that the chipmaker's order cancellations were slowing

Banc of America cut estimates on Microchip Technology (MCHP ).

Analyst Douglas Lee cut the $0.85 fiscal 2002 (March.) EPS estimate to $0.72, and reduced the $1.01 fiscal 2003 estimate to $0.96. Microchip expects total revenue to decline a further 10% sequentially in Q1. He notes demand remains weakest in the EEPROM business (20% of sales), where excess inventories and pricing pressure should continue in the near term. The company's core microcontroller business (72% of revenues) appears to be faring better, and it's expected to be down less than the company average in Q1.

Lee says visibility remains poor, but order cancellations and push-out rates have been decelerating as of late. He maintains the market performer rating.

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