Intel issues warning, will cut jobs
By Nicole Maestri, CBS.MarketWatch.com
Last Update: 7:08 PM ET Mar 8, 2001
NEW YORK (CBS.MW) -- Shares of Intel quickly slid nearly 8 percent in Thursday's after-hours session when the chip giant lowered revenue forecasts and said it would slice 5,000 jobs this year.
Between Intel's surprise announcement and warnings from RF Micro Devices, Somera Communications, On Semiconductor and Integrated Circuits, the tech sector was awash in red Thursday evening.
Posting losses were shares of Cisco (CSCO: news, msgs, alerts) , off 2.2 percent; Sun Microsystems (SUNW: news, msgs, alerts) , down 2.2 percent; Applied Materials (AMAT: news, msgs, alerts) , off nearly 4 percent; and Dell (DELL: news, msgs, alerts) , stumbling 5.3 percent.
TranSwitch's shares rose 4 percent on the Island ECN despite a revenue warning from the company.
"People are breathing a sigh of relief," said Alex Gauna, an analyst with Banc of America Securities, referring to TranSwitch's financial update.
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While TranSwitch's competitors Applied Micro Circuits (AMCC: news, msgs, alerts) and Broadcom (BRCM: news, msgs, alerts) had to cut forecasts drastically, he said, TranSwitch only had to warn of flat sequential growth, rather than losses.
In the broader markets, the tech sell-off sent the Nasdaq sharply lower for the day, while the Dow Jones Industrial Average managed to post a gain, buoyed by interest in the retail sector. Read Market Snapshot.
Intel
Shares of Intel quickly traded into the red after the chipmaker warned of a financial shortfall and said it intends to cut 5,000 jobs over the next nine months.
With the current PC malaise spreading to the networking, communications and server categories, Intel said it now expects first-quarter revenue to fall 25 percent sequentially, compared with previous expectations for a decline of 15 percent. Based on fourth-quarter revenue of $8.7 billion, first-quarter sales should be about $6.53 billion.
Analysts surveyed by First Call/Thomson Financial had been expecting revenue of $7.4 billion to be reported April 18. Gross margins are expected to contract 7 percentage points to 51 percent due to lower revenue.
On Island, shared traded hands down 7.7 percent to $30.70. Shares of Intel finished the day up 31 cents to $33.25.
TranSwitch
Weakness in the telecommunications systems market in North America prompted TranSwitch Corp. (TXCC: news, msgs, alerts) to warn of a first-quarter shortfall.
The company expects earnings between 16 cents and 17 cents a share, while analysts had been expecting 19 cents a share. Revenue will be essentially flat compared with the fourth-quarter total of $51 million, TranSwitch said.
In addition, based on current conditions, the company expects second-quarter revenue to be flat with the first quarter. TranSwitch noted that its business in Asia and Europe continues to be strong.
But investors were unfazed by the news and sent shares up 4.2 percent to $20.06 on Island, erasing a regular-session loss of 5.8 percent that had shares finishing at $19.25.
RF Micro Devices
RF Micro Devices (RFMD: news, msgs, alerts) warned investors that its fourth-quarter revenue will fall short of the current consensus estimate, due to weakness in certain wireless markets, handset inventory overhang and delays of new handset models.
The company said it anticipates revenue of about $55 million, far off the consensus estimate of $72 million. On a per share basis, the company expects a loss of 3 to 4 cents a share, while analysts had been expecting a profit of 2 cents.
Coming off a halt, shares slid 13 percent to $11.56 on Island, adding to regular-session losses of 4 percent.
Somera Communications
Experiencing a steeper downturn in the telecom sector than it expected, Somera Communications (SMRA: news, msgs, alerts) said it now expects 2001 revenue to grow 7 percent to 10 percent over 2000, with-first quarter revenue of $42 million.
Somera said it sees second-quarter revenue growth flat to 10 percent higher than the fist quarter. The company said it expects to be profitable in all quarters.
Somera shares ended Nasdaq trading down 4 percent to $13.38 but then retreated 11 percent to $11.88 on Island.
On Semiconductor
On Semiconductor (ONNN: news, msgs, alerts) warned that its first-quarter revenue will be 30 percent down compared with the fourth quarter, with a per share loss of between 13 and 15 cents a share. Analysts polled by First Call had been expecting the company to break even, prior to the warning.
Previously, the company expected a sequential product revenue reduction of 18 to 20 percent, with a per-share loss of about 3 cents. "Overall demand for our products continues to be soft," said Steve Hanson, president and chief executive officer.
Coming off a halt, On's shares slid 20 percent in after hours to $5, after rising 1 percent to $5.31 in regular-session trading.
Integrated Circuit Systems
Silicon timing devices manufacturer Integrated Circuit Systems (ICST: news, msgs, alerts) said its third-quarter earnings would be in the range of 18 cents to 22 cents a share, down from the current consensus estimate of 23 cents a share. Revenue will drop 15 to 20 percent from the second quarter, instead of the previous estimate of a 10 percent drop.
Shares finished the regular session down 5.3 percent to $15.69 but moved down 23 percent to $12.13 after hours.
Inforte
Inforte Corp. (INFT: news, msgs, alerts) said it's comfortable with the March 2001 quarter revenue and earnings per share targets it gave at the end of January.
Chief Financial Officer Nick Padgett said, "We do expect the revenue and earnings results for March 2001 to be around the bottom of, but not below, our previously announced guidance ranges, barring any unforeseeable events during the remainder of the quarter. This implies revenue around $14 million and earnings around 6 cents per share."
Inforte shares slid 2.5 percent in Nasdaq trading to $8.38 but rose to $9 in trading on the Island ECN. |
