Reference to the CNXT warning and RIF is buried in the text.
Stock is UP but that cannot last. Once the Bear market rally is over, new lows are guaranteed.
Still think CNXT is a SELL.
David
---
PMC-Sierra Cuts Outlook, 13 Percent of Workforce
MONDAY, MARCH 26, 2001 12:46 PM
- Unknown (rittz)
NEW YORK (Reuters) - Citing a drop-off in demand and order cancellations, communications chip maker PMC-Sierra Inc. (NASDAQ NM:PMCS) on Monday slashed its expectations for first-quarter earnings and revenues, and said it would cut its workforce by more than 13 percent and close some facilities.
Shares of PMC-Sierra fell $2.40, or almost 7 percent, to $31.57 in early trade on the Nasdaq, edging close to a 52-week low of $29.75.
The Burnaby, British Columbia-based company, also said it will take a charge of between $18 million and $22 million in the first quarter as it cuts 230 positions from its 1,740-person work force. The company will stop the development of certain products, close some small facilities and defer employee and executive bonuses in response to the drop in demand.
PMC-Sierra, the latest company in the hard-hit semiconductor sector to warn of weaker results, said in a statement it now expects revenue of between $118 million and $120 million in the first quarter. Its earnings should come in at 2 to 3 cents per share, excluding goodwill amortization costs and restructuring charges, the company said.
Analysts on average had expected PMC-Sierra to report earnings of 12 cents per share before goodwill amortization costs and revenue of nearly $160 million, according to research firm Thomson Financial/First Call. A year earlier it had earned 17 cents per share, and had revenue of $103 million.
Much of the revenue shortfall can be attributed to weaker performance by its customers, Chairman and Chief Executive Bob Bailey said during a conference call.
Its customer list -- including network equipment makers Cisco Systems Inc. (NASDAQ NM:CSCO), Lucent Technologies Inc. (NYSE:LU) and Nortel Networks Corp. (NYSE:NT) -- 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 revenues to drop 50 percent from the previous quarter.
``That's giving us the net result that you're seeing,'' he said.
Fellow communications chip maker Conexant Systems Inc. (NASDAQ NM:CNXT) also warned investors on Monday about future performance, and announced plans to cut 1,500 jobs, or about one-fifth of its workforce.
Earlier in March, Irvine, Calif.-based Broadcom Corp. (NASDAQ NM:BRCM), another communications chip maker, said its first-quarter earnings would disappoint because of weak orders, citing a contract termination by 3Com Corp. (NASDAQ NM:COMS), one of its largest customers.
On March 1, chip maker Applied Micro Circuits Corp. (NASDAQ NM:AMCC) cut its revenue estimates for the fourth quarter after some of its major customers warned about their own performance.
Reut12:46 03-26-01 |
