Atmel Shares Plunge On Sales Slump

NEW YORK (AP) — Shares of Atmel Corp. dropped Wednesday after the chip maker reported a deeper sales slump than Wall Street analysts were expecting.

The San Jose, Calif.-based company reported an adjusted profit Tuesday of 4 cents per share. That beat the average analyst estimate, which called for a loss of 4 cents.

But sales during the first quarter dropped 34 percent year-over-year to $271.5 million, below the average forecast of $289 million.

Atmel's sales estimate for the quarter ending in June also disappointed. The company expects $274.2 million to $282.4 million, where analysts were looking for $296.8 million.

Broadpoint AmTech analyst Doug Freedman downgraded Atmel's shares to "Neutral" from "Buy."

He told clients in a note Wednesday that Atmel's shares have reached his $4 price target and seem unlikely to go much higher before sales recover.

"Street estimates will likely decline and best case stay flat, making it difficult to justify higher valuations," he said.

The company is still suffering from a global downturn in the semiconductor industry that began sapping chip orders last year.

Atmel's shares were down 43 cents, or 11 percent, at $3.66 in afternoon trading.