After the close yesterday, Microchip Technology Inc. (MCHP: sentiment, chart, options) slashed its fiscal third-quarter earnings expectations to 23 cents 26 cents per share, compared to previous guidance of 35 cents 40 cents per share. The chipmaker also predicts a 29% - 31% decline in net sales to $186.1 million 191.5 million, from $269.7 million in the fiscal second quarter. Analysts, on average, forecast fiscal third-quarter revenue of $232 million.

The firm also said it would extend its pay cuts for all nonmanufacturing employees, and would continue reducing capacity at its domestic water-fabrication facilities, as well as its assembly and test facility in Thailand. The company attributed the lowered guidance to a widespread semiconductor slowdown.

However, regardless of the aforementioned efforts to conserve cash, Microchip said it would maintain its dividend by dipping into a portion of the cash from its balance sheet.

The news has prompted a slew of analysts to reevaluate their positions. Most notably, Barclays cut its price target on MCHP to $18 from $25, while S&P Equity slashed its target to $25 from $27. More bearish brokerage action could be on the horizon, as Zacks reports that MCHP currently harbors 8 "strong buy" ratings, compared to 6 "hold" or worse ratings.

In afternoon trading, the shares of MCHP are down 1.5 points, or 7.5%, dawdling near the 18.50 level.