|
PMC warns, cuts staff
|
 |
March 26, 2001: 11:40 a.m. ET
Chipmaker lowers earnings, revenue guidance; weak demand lowers orders
|
NEW YORK (CNNfn) - Chipmaker PMC-Sierra Inc. warned Monday about first-quarter profit and revenue and said it is cutting about 13 percent of its staff.
The warning is the second for the current quarter by the Burnaby, British Columbia-based company, which makes high-performance chips primarily for the communications industry. It now expects revenue of between $118 million and $120 million and earnings per share of 2 or 3 cents, excluding amortization of intangibles and charges related to a work-force reduction.
 Analysts surveyed by First Call were looking for revenue of $159.7 million and EPS of 12 cents.
The company warned analysts Jan. 25 that first-quarter EPS would be 13 to 15 cents, while revenue would be in the $160 million to $170 million range. At that time the forecasts called for EPS of 37 cents and revenue of $257.6 million.
PMC also will cut about 230 of 1,740 employees. The company blamed weak demand and cancellation of backlog during the quarter. The cuts will start Monday and include closing several of the company's design centers and properties. Those operations were not identified in Monday's statement, and the company also did not give details on the size of the charge it expects to take resulting from the cuts.
Click here for a look at chipmaker stocks
Much of the revenue shortfall can be attributed to weaker performance by its customers, Chairman and CEO Bob Bailey said during a conference call.
Its customer list -- including network equipment makers Cisco Systems Inc. (CSCO: Research, Estimates), Lucent Technologies Inc. (LU: Research, Estimates) and Nortel Networks Corp. (NT: Research, Estimates) -- reads like a guide to the latest trouble spots in the electronics and telecommunications industries.
"Several of our customers have basically a net booking of close to zero this quarter," Bailey said, adding that some clients are expecting first-quarter revenue to drop 50 percent from the previous quarter.
"That's giving us the net result that you're seeing," he said.
Shares of PMC-Sierra (PMCS: Research, Estimates) lost $2.10 to $31.84 in morning trading Monday, after dropping $3.72 to $33.94 Friday, before the warning.
Other communications chipmakers recently warning about disappointing revenue and earnings include Conexant Systems Inc. (CNXT: Research, Estimates), Broadcom Corp. (BRCM: Research, Estimates) and Applied Micro Circuits Corp. (AMCC: Research, Estimates). 
|
|
|
|
|
 |
|
