As 2011 winds down, it looks as if few, if any, chip stocks will escape the malaise. Cavium (Nasdaq: CAVM) reported a slowdown in its business just a little while ago, and now Atmel (Nasdaq: ATML) has missed its revenue target and issued sharply lower guidance for the next quarter. Although there are plenty of doubts around this company, and more now with the revised guidance, it's hard to make money in slam-dunk stories; risk-tolerant investors ought to consider stepping up and buying this name on weakness.
Hitting a Wall in the Third Quarter
Atmel announced that revenue rose 15% from last year (adjusting for a spinoff), and was basically flat on a sequential basis, a result that was about 1% shy of the average Wall Street guess. Microcontrollers were fairly strong, up 18% from last year and flat sequentially, with 8-bit showing more sequential strength. Non-volatile memory and RF/auto were both down sequentially, while ASIC showed solid growth, but comprises a small amount of total revenue.
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