STOCKREPORTS

Atmel Corporation

Nasdaq Symbol ATML In S&P MidCap 400

Recent Price 31.63 52 Wk Range 46.38 - 23.00

Yield Nil 12-Mo. P/E 18.5

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 4- Fair Value 37.40 Risk HIGH Earn/Div Rank B
Technical Evaluation: BEARISH since 03/97 Rel. Strength Rank (1 Lowest - 99 Highest) 78 Insider Activity UnFavorable

Overview 14-JUL-97

Despite a stronger second half, we expect revenues to be flat for 1997, as pricing pressures in the company's core non-volatile memory business continue to hinder results. Furthermore, while the company has been able to obtain design wins for new flash memory products, it has not been able to deliver the products fast enough to complete customer qualifications, that is, to get the customer's final approval for use of the product. We expect the difficult pricing environment and higher depreciation charges to put pressure on gross margins in coming quarters, but tight controls over SG&A and R&D expenses should lessen the impact on operating margins. Atmel has increased its borrowings, in part to finance its new fabrication facility in France, which is to start production in the third quarter. Overall, we see EPS of $1.29 in 1997, and $1.70 in 1998.

Valuation 14-JUL-97

The shares of this chip-maker advanced sharply following the company's report of stronger bookings in June, especially for its newer series products. As a result, the stock was recently trading at 26X our 1997 EPS estimate of $1.29, and at 20X our 1998 EPS estimate of $1.70. Although near-term trends appear positive, we are maintaining our hold recommendation on ATML, as we believe that most of the good news is already priced into the stock. With intense competition expected to cause continued pricing pressures in the EPROM and flash markets, we see little impetus for the P/E multiple to advance from its current lofty levels. Athough earnings could surprise on the upside, we expect ATML only to perform in line with most semiconductor stocks over the next six to 12 months.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: No cash has been paid. Two-for-one stock splits were effected in 1994 and 1995.

Business Summary 14-JUL-97

Atmel Corp. (ATML) has been quite successful in its first 13 years of existence; annual revenues have grown to over $1 billion, and net income is approaching $200 million. Led by its soft-spoken Greek-immigrant founder George Perlegos, the company manufacturers and markets a broad range of high performance memory and logic integrated circuits. ATML's products are used in a wide range of applications in the computing, telecommunications, industrial control and instrumentation, consumer electronics and commercial and military avionics markets. International product sales accounted for 57% and 52% of total revenues in 1996 and 1995, respectively.

The company's strategy is to focus its design attention on specialized areas within each of several substantial market opportunities. ATML attempts to develop its products with performance enhancements or other special features so that they can be sold at higher than average prices.

The company's memory products include electrically erasable programmable read-only memory (EEPROM), erasable programmable read-only memory (EPROM) and flash memories. Memory products offer non-volatile program and data storage. Non-volatile memories allow a wide range of products, including home appliances and PCs and peripherals to remember instructions even when they are shut off. For example, non-volatile memories allow a car radio to remember a station line-up programmed by the car's owner even after the vehicle's battery dies. Non-volatile memories account for a majority of ATML's revenues.

Logic products include microcontrollers, programmable logic devices (PLDs), application specific integrated circuits (ASICs), and field programmable gate-arrays (FPGAs). These products are engineered with the company's non-volatile design techniques which ATML feels gives these products performance advantages over their competitors.

ATML's results are currently being hurt by weakness in the EPROM market. The EPROM market, which is very competitive, features commodity-like pricing. ATML intends to move away from EPROM, to a broader line of flash memory products, which are growing rapidly. However, this transition has been hindered by delays in the delivery of new flash products.

Capitalization

Long Term Debt: $508,811,000 (6/97).

Curr. Ratio	1.4	1.6	1.5	2.6	3.6	4.7	2.6	1.9	NA	NA
% LT Debt of Cap.	25.6	12.9	11.2	9.7	14.8	15.6	47.9	40.3	2.0	2.9
% Net Inc.of Revs.	18.9	18.0	15.8	13.5	10.0	8.6	5.5	12.3	12.5	11.2
% Ret. on Assets	17.0	15.6	13.7	11.6	8.0	7.9	4.4	10.9	26.3	24.2
% Ret. on Equity	29.3	24.1	19.9	16.1	11.1	13.6	12.3	26.1	47.9	55.8

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--2325 Orchard Pkwy., San Jose, CA 95131. Tel--(408) 441-0311. Website--http://www.atmel.com Fax--(408) 436-4200. Chrmn, Pres & CEO--George Perlegos. VP-Fin, CFO & Investor Contact--Kris Chellam. Secy--M. Bertelsen. Dirs--N. Hall, George Perlegos, Gust Perlegos, T. P. Thomas, Tsung-Ching Wu. Transfer Agent & Registrar--ChaseMellon Shareholder Services, SF. Incorporated--in California in 1984. Empl-- 3,914. S&P Analyst: B. McGovern

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997