Despite a challenging macroeconomic environment, premium semiconductor manufacturer Microchip Technology Incorporated MCHP reported strong fourth-quarter fiscal 2016 results. GAAP net income for fourth-quarter fiscal 2016 (ended Mar 31, 2016) was $67.4 million or 31 cents per share compared with $99.4 million or 45 cents per share in the year-ago quarter. The year-over-year decrease in earnings, despite a healthy top-line improvement, was primarily attributable to high operating expenses.Non-GAAP net income for the reported quarter was $153.0 million or 70 cents per share compared with $148.8 million or 68 cents per share in the year-earlier quarter. Recurring earnings (with stock-based compensation adjustments) were 65 cents per share, which comfortably exceeded the Zacks Consensus Estimate by 5 cents.For fiscal 2016, GAAP net income declined to $324.1 million or $1.49 per share from $369.0 million or $1.65 per share in fiscal 2015, largely due to high operating expenses. Non-GAAP earnings for fiscal 2016 were $583.3 million or $2.68 per share, compared with $593.9 million or $2.66 per share in the prior fiscal.RevenuesNet revenue (GAAP) for the reported quarter was $557.6 million, up 2.7% year over year, while non-GAAP revenues were up 3.9% to an all-time high of $568.4 million. The non-GAAP revenues for fourth-quarter fiscal 2016 exceeded the Zacks Consensus Estimate of $564 million. For fiscal 2016, Microchip reported record high GAAP and non-GAAP revenues of $2,173 million and $2,214 million, respectively with solid microcontroller sales.In terms of product mix, revenues from Microcontroller products accounted for 61.0% of GAAP revenues in the quarter, while Analog, Memory and Licensing products generated 28.8%, 4.9% and 3.6% of the same, respectively. From the geographical perspective, bulk of the GAAP revenues were generated in Asia ($312.2 million, 56% of the total revenue), followed by Europe ($135.4 million, 24.3%) and Americas ($110.0 million, 19.7%).By product line, GAAP revenues from microcontrollers were $340.4 million, up sequentially in all three products (8-bit, 16-bit, and 32-bit microcontrollers) with a broad-based recovery in the overall microcontroller business. Microchip’s microcontroller business continued to outperform the market with new product momentum and steady customer engagements.GAAP revenues from the analog products were up 34.6% year over year to $160.9 million. Over the last four quarters, the analog business was up 26.3% due to organic growth and accretive effect of the Micrel acquisition. Microchip has almost completed the integration of Micrel and expects the process to be completed by Dec 2016.With GAAP revenues of $27.2 million in the reported quarter, the memory business was down 1.8% sequentially. GAAP revenue from the licensing business was $20.0 million in the reported quarter.Microchip recorded GAAP gross margin of 54.3% for the reported quarter. Operating income declined to $79.9 million from $110.3 million in the year-ago period, due to high operating expenses. Operating margin stood at 14.3% in the reported quarter.Atmel AcquisitionDuring the quarter, Microchip acquired the touchscreen chipmaker Atmel Corporation for $8.15 per share, comprising $7.00 per share in cash and $1.15 per share in Microchip stock. This equated to a total equity value of about $3.56 billion and total enterprise value of about $3.40 billion.The buyout was funded through a combination of cash and common stock. The company expects the Atmel buyout to supplement its operational excellence and customer base. Microchip further believes that the acquisition will aid the launch of cutting-edge competitive products, going forward, helping it grab a higher market share in the microcontroller business.Balance SheetCash and short-term investments were $2,446 million at fiscal end 2016 with $1,052 million under its long term line of credit, compared with the respective tallies of $1,958.9 million and $461.9 million in the prior-year period. Net cash generation for the quarter (excluding acquisition, dividend payment, and reduction in borrowings) was record high at $196.3 million.The company declared a quarterly cash dividend of 35.95 cents per share payable on Jun 6, 2016 to stockholders of record on May 23. Capital expenditure was approximately $16.5 million with a consolidated inventory of $306.8 million.OutlookManagement provided guidance for the first quarter of fiscal 2017. It expects non-GAAP net sales between $799.1 million and $845.9 million, while non-GAAP gross margin is expected in the range of 54.8% to 55.2%. Non-GAAP net income is anticipated in the range of $160.7 million to $181.2 million, with non-GAAP earnings of 70 cents to 79 cents per share. Microchip expects to generate approximately $140 million to $160 million cash in the upcoming quarter prior to the dividend payment and acquisitions. The company expects to incur $35 million in capital expenditure in the next quarter, bringing its tally to about $140 million for fiscal 2017.Moving forward, management expects the accretion from Micrel and Atmel along with healthy organic growth to lead to an 18% rise in non-GAAP EPS from fiscal 2016 to fiscal 2017. We remain impressed with the bullish outlook of this Zacks Rank #1 (Strong Buy) stock. Some other stocks that look promising in the industry include M/A-Com Technology Solutions Holdings, Inc. MTSI, Monolithic Power Systems, Inc. MPWR and Silicon Laboratories Inc. SLAB, each sporting the same Zacks Rank as Microchip.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MICROCHIP TECH (MCHP): Free Stock Analysis Report SILICON LAB INC (SLAB): Free Stock Analysis Report MONOLITHIC PWR (MPWR): Free Stock Analysis Report MA-COM TECH SOL (MTSI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research