PMC-Sierra Inc, whose semiconductors speed Internet traffic, said second-quarter revenue will miss forecasts and the company will post a loss because of a decline in customer demand.
Second-quarter revenue will be US$93 million to US$95 million, with a loss excluding acquisition-related and stock-compensation costs of US$0.07 to US$0.09 a share, the Santa Clara, California-based company said in a statement. In April, Chief Executive Bob Bailey predicted revenue of US$108 million and break-even results on that basis.
PMC-Sierra's lowered forecast follows similar news this week from rivals Applied Micro Circuits Corp. and Vitesse Semiconductor Corp. Makers of chips for telecommunications gear, which boomed in the late 1990s and 2000, have suffered plunging sales this year as customers such as Cisco Systems Inc work off an inventory glut and phone companies spend less on equipment.
``It's that demand continues to be lethargic and that inventories continue to be ahead of where people thought they were,'' said Frost Securities' Cody Acree, who rates PMC-Sierra shares a ``strong buy.'' PMC-Sierra shares rose US$1.73 to US$29.15 in regular trading.
They climbed as high as US$30.75 in after-hours trading because investors expected the new forecast after rivals lowered targets, and the shares had already risen this week, Acree said. The shares had fallen 63 percent this year after rising in six of the past seven years.
During a conference call with analysts and investors, Bailey and Chief Financial Officer John Sullivan didn't give a forecast beyond the quarter and said the company will disclose more details when it reports final second-quarter results on July 19.
Analysts polled by First Call/Thomson financial expected a loss, on average, of 2 cents a share, on revenue of US$102.3 million.
The company had a US$94 million order backlog at the beginning of the period and expected to get more revenue from new orders, known as ``turns business'' in industry jargon, Bailey said on a conference call. Those sales didn't happen, he said.
``We anticipated some turns business in the second quarter, but we received little,'' Bailey said.
In the year-earlier period, the company reported net income of US$49.9 million on sales of US$134.1 million.
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