Chipmaker PMC-Sierra, Inc. (PMCS) Thursday reported a plunge in second-quarter profit, hurt partly by a hefty income tax provision as well as a 12% drop in revenues. However, adjusted profit, although lower than last year, topped analysts' consensus.
The Santa Clara, California-based company's second quarter net income dropped to $7.85 million or $0.03 per share from net income of $135.95 million or $0.60 per share in the second quarter of 2008.
Non-GAAP net income for the period was $29.7 million or $0.13 per share, compared to $29.75 million or $0.13 per share in the previous year. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.
In the latest period, net income on a non-GAAP basis excludes stock-based compensation expense, amortization of purchased intangible assets, foreign exchange loss on foreign tax liabilities, income tax provision, restructuring costs and non-cash interest expense.
Second-quarter revenues declined to $123.19 million from restated $139.84 million reported in the second quarter of 2008. Analysts were looking for revenues of $119.89 million.The company reported a foreign exchange loss of $2.87 million for the quarter, wider than $1.07 million incurred last year. Interest expense for the period was $841 thousand, compared to interest income of $113 thousand in the previous year.
In the latest period, the company had income tax provision of $3.43 million, compared to income tax recovery of $120.40 million last year.
In the second-quarter, the company experienced improved bookings throughout the period. The company noted that it benefited from strong growth in the enterprise storage and Fiber-To-The-Home business. Also, the company's wireless and wireline businesses saw continued robust activity in China during the latest period.
In the enterprise storage business, activity improved sequentially, primarily due to the ramp of its 6Gb/s SAS RAID-on-Chip device. PMC-Sierra said shipments of its 6Gb/s RAID-on-Chip device and 6Gb/s SAS Expander switch device to Hewlett-Packard Co. (HPQ) picked up nicely during the quarter.
In the first quarter, the company reported a net loss of $3.92 million or $0.02 per share that narrowed from $20.92 million or $0.10 per share in the corresponding quarter of last year. Net revenues for the quarter were down 18% at $102.57 million.
For the first half of the year, net income dropped to $3.93 million or $0.02 per share from restated $115.03 million or $0.52 per share in the prior year. Revenues dropped to $225.77 million from restated $264.88 million in the previous year.
Based on the backcloth and bookings to date, the company currently expects third quarter revenues in the range of $125 million to $135 million, representing 2% to 10% growth on a quarter-over-quarter basis. Analysts expect third-quarter revenues in the range of $120 million-$128.38 million.
The company continues to expect that its China Telecom business, which was strong in the first half of the year, will slow in the second half of the year as the build-out rate of 3G Wireless base stations will be less than in the first-half.
Among others in the industry, Broadcom Corp. (BRCM) Thursday reported a plunge in second quarter profit on substantially lower income from operations and lower revenues. The company's net income plummeted to $13.40 million or $0.03 per share from $134.79 million or $0.25 per share in the same quarter a year ago, while revenues dropped to $1.04 billion from $1.20 billion in the prior-year quarter.
PMCS closed Thursday's regular trade at $8.73, up $0.42 or 5.05%, on 8.58 million shares. For the past year, the stock traded in the range of $2.82-$9.95.
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