Question-and-Answer Session
Operator
Certainly. (Operator instructions). And our first question today will come from Romit Shah with Barclays Capital.
Romit Shah – Barclays Capital
Good afternoon. Thanks for taking my question. Steve, there is a number of companies that a couple of quarters ago had similar margins, but today are in the red. Given the adjustments you have made to lower capacity and reduce expenses, can you give us a sense of what cash breakeven might be for Microchip?
Steve Sanghi
Cash flow breakeven?
Romit Shah – Barclays Capital
Yes.
Steve Sanghi
Or operating profit breakeven, which one?
Romit Shah – Barclays Capital
Either one is fine.
Steve Sanghi
I don’t know if we have either of them. We are so profitable if you look at the numbers that the gross margin we talked about, internal plan is about 50% gross margin, substantial deterioration from the peak. But this is sort of where it bottoms. And you should see gross margins starting to inch up from starting the June quarter and operating expenses are in low 30s. So the company’s still very, very profitable, and you have to go way, way down in revenue to the point where I couldn’t fathom for the company to actually go below breakeven and start losing money. In any such eventuality, we will further cut manufacturing and expenses and all that much deeper, so I don’t think we will even get close to it.
Romit Shah – Barclays Capital
Okay. And as an follow up, you guys have talked I think in the last quarter or so about acquisitions as a potential use of cash, and if these acquisitions are to go through, do you think you’ll be able to still support the dividend?
Steve Sanghi
The answer to that is yes. I mean we have modeled it, there is no scenario we have put together internally where it becomes not possible for us to pay the dividend. We wouldn’t take any actions which would make that a problem.
Romit Shah – Barclays Capital
Okay, thank you.
Operator
Okay. Now we will hear from Chris Danely with JPMorgan.
Chris Danely – JPMorgan
Thanks. Steve, I guess you give us your rough guidance for sort of OpEx and gross margins for the March quarter. Assuming an extremely gradual stabilization/recovery for the rest of the year, how do you expect your OpEx and gross margins to trend after the March quarter?
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