Don't Count Atmel Out
Harsh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A couple of months back I told you why Atmel (NASDAQ: ATML) looks like a stock for the long-term. However, if you judge the company on its performance and guidance issued in the just-concluded first quarter, chances are that you won’t be impressed. Although Atmel managed to beat the Street’s top line projections and met on the bottom line, it saw a sharp drop in its margins and also offered a dismal outlook for the current quarter. The negativity forced the shares to take a 15% haircut, probably opening up an opportunity for value investors to get going. Let’s see why.
In my previous post, I told you that Atmel supplies touchscreen controllers to non-Apple (NASDAQ: AAPL) devices. That factor again played a big handicap in the previous quarter as Apple blew the Street away and most of its suppliers had a great time. But I also shed some light on the possibility of Atmel’s touchscreen controllers being used by Amazon (NASDAQ: AMZN) for its Kindle Fire tablet. Fool analyst Evan Niu analyzed this possibility in a well laid-out manner a few days back, giving more reasons to Atmel bulls to remain positive on its prospects.
Moreover, CEO Steven Laub is of the opinion that Atmel’s business has bottomed and it expects to record sequential growth every quarter this year going forward. Most of this expectation is based on the success that Windows 8, to be launched by Microsoft later this year, brings along with. Also, the company’s success in “media-based e-reader, e-book tablets, which now accounts for well over half of the Android tablets shipping today” will be another driving factor. Now when the CEO says that, he more or less makes it clear that Atmel is counting on Kindle Fire to fuel some of its success since the Kindle Fire fits the bill of the Android tablet having maximum market share.
Atmel is of the opinion that the weaknesses faced by its business are behind it. I had given you a good number of reasons last time around when I covered Atmel and they still stand. The major problem plaguing the company is the sluggish sales of Android-enabled tablets. However, there are signs that it has landed a spot in the Kindle Fire and this will probably fix the tablet part. And once everything is fixed and things are in place, Atmel looks like a stock which will live up to its promise in the long run.
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