Vitesse sinks to 7-year low on bleak outlook
Friday September 27, 12:19 pm ET
biz.yahoo.com
NEW YORK, Sept 27 (Reuters) - Shares of Vitesse Semiconductor Corp. (NasdaqNM:VTSS) on Friday fell to a seven-year low, extending a recent dramatic decline spurred by pessimism about the communications chip maker's market.
Vitesse shares were down 10 cents, or about 12 percent, to 75 cents in active late-morning trade after touching a 52-week low of 67 cents earlier. The stock is down 48 percent in September alone.
For much of the month, analysts have said the outlook for Vitesse, which makes high-performance chips for the fiber-optic communications industry, looks dour due to the company's depressed operating profitability and expectations that market conditions will remain challenging in the intermediate term.
That feeling is supported by downward outlook revisions from telecoms equipment manufacturers such as Alcatel (Paris:CGEP.PA), Nortel (Toronto:NT.TO; NYSE:NT), Lucent (NYSE:LU) and Tellabs (NasdaqNM:TLAB).
Goldman Sachs on Friday trimmed its estimates on Vitesse and a handful of its peers, such as PMC-Sierra Inc.(NasdaqNM:PMCS) and Broadcom Corp.(NasdaqNM:BRCM), as a result of "the prolonged weakness in telecom and relative softness in PCs, cable and enterprise."
"Recent checks, combined with further end-market deterioration, makes us increasingly concerned about the slope of growth in (the fourth quarter) and the magnitude of the recovery in 2003," Goldman said.
Others in the investment community also see tough times ahead for Vitesse.
"We see no evidence carrier spending will improve until 2003, consequently we believe it will be difficult for Vitesse to realize any appreciable growth for the remainder of the year," J.P. Morgan analyst Tony Carbone said earlier this week in a note to clients.
Thomas Weisel Partners analyst Jeremy Bunting said, "Until carriers begin increasing their capital expenditures for new network builds and incremental adds, we believe that demand for (Vitesse) will remain sluggish." |
