PMC-Sierra 3Q Results in Line With Estimates, Margins Off


PMC-Sierra, Inc. (NASDAQ:PMCS) weighed in with third-quarter results that beat expectations, but gross margin came in slightly beneath the company’s forecast, prompting shares to fall in trading after hours.

In the third quarter, the chip-maker posted a profit of $15.2 million, or 6 cents a share, compared with year-ago earnings of $27.8 million, or 12 cents a share. Adjusted earnings improved to 18 cents a share, up from last year’s earnings of 15 cents per share.

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Revenue rose 24% to $162.3 million, up from last year’s sales of $130.88 million. Sales were slightly higher than analyst expectations for $162.09 million, and in-line with earnings-per-share forecasts for 18 cents.

"In the third quarter of 2010, we benefited from growth in our microprocessor and storage businesses, which includes a full quarter of business following the purchase of the Adaptec storage channel assets in June earlier this year," said Greg Lang, president and chief executive officer of PMC-Sierra in a statement. "We did, however, experience sequentially lower activity in our WAN Infrastructure business as some customers worked down their inventory levels."

The company cut its revenue and margin view last month due to concerns for weak demand, along with chip-making behemoths Intel and Advanced Micro Devices. Gross margin came in slightly below expectations at 66.9%, after the company warned in September that margins would be at the lower end of its previously forecast range of 67.5% to 68.5%.

Shares of PMC-Sierra closed the day even, at $7.01 a share, but the stock was down 16 cents or 2.28% in after-hours trading. Year-to-date, the stock is down 19%.

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