Microchip Technology Plans $1.35B Convertible Stock Offering

Microchip Technology Inc. experienced a stock decline of over 3% during after-hours trading after announcing a plan to offer $1.35 billion in convertible stock. The company intends to use the proceeds to manage capped call transactions and repay existing debt, including notes from its commercial paper program. This announcement follows a recent decision to cut approximately 2,000 jobs, or 9% of its workforce, due to excess inventory and decreased demand from the automotive sector. Earlier this month, Microchip reported third-quarter earnings that fell short of Wall Street expectations, leading to weak guidance and a significant surge in inventory levels. Despite the current challenges, brokerages remain largely optimistic, with a majority maintaining 'Buy' or 'Strong Buy' recommendations for the stock. Microchip's stock has fallen nearly 5% year-to-date and over 37% in the past year, reflecting broader sector trends.