Pre-earnings report from SSB:
PMC-Sierra's orders and shipments have trended higher than expectations
in the March quarter, fueled by demand for the company's broadband
networking chips. We currently have 16% total growth from December to
March in our model, paced by 18% sequential growth in networking chip
sales (roughly 95% of total sales). Based on the tone of demand,,
however, we believe PMC will report sequential revenue growth in the 20%
neighborhood. EPS upside will be limited, however, due to the large
acquisitions PMC made in the quarter. We expect the company to report
EPS in-line or a penny ahead of our estimate and First Call consensus of
$0.16.
In December, PMC-Sierra's backlog was triple year-ago levels, and we
believe strong order momentum was sustained throughout the March
quarter. Guidance for the June quarter will again be very bullish, with
backlog and order trends supporting double digit sequential revenue
growth. We currently have 9% sales growth modeled from March to June,
but this number will likely go up to the 15%-17% range. Lucent/Ascend,
Cisco, and Nortel each account for more than 10% of sales, although PMC
does business with virtually every equipment supplier of consequence.
PMC acquired three companies in the March quarter in a move to offer a
more complete system solution to customers. The first acquisition,
AANetCom, designs transceivers for system backplanes, essentially
connecting multiple system line cards with high speed links. Extreme
Packet Devices, acquired coincident with AANetCom, develops chipsets used
for higher level traffic management. In January, PMC also acquired
Toucan Technology, a developer of DSP and telecommunications chips.
These acquisitions will not add meaningfully to revenue for quite some
time--perhaps 2001--but they demonstrate PMC's commitment to gain more
dollar content per board in applications such as IP routers, DSLAMs,
cross-connects and Add/Drop Multiplexers. |
