PMC-Sierra Sees Bleak First Quarter

Earnings Scorecard
Actual	Estimated*	Year-Ago
$0.34	$0.34	$0.11

Updated from 4:45 p.m. ET

PMC-Sierra (PMCS - Cramer's Take - Stockpickr), a designer of chip networking solutions, said that earnings in the fourth quarter were 34 cents a share, in line with expectations, but its dire outlook for 2001 proved far more intriguing to investors.

Company executives predicted a drastic decline for the first quarter in both revenue and earnings during their conference call, driving the stock down sharply in after-hours trading. It recently was trading at $67 on Island after finishing regular trading at $95.88.

The company said in the first quarter that revenue will fall 26% to 31% to $160 million to $170 million from fourth quarter due to a build-up in inventories and declining orders. Reuters reported that the company also said that first-quarter earnings per share would come in at 13 cents to 15 cents a share, far below the 37 cents a share analysts were expecting.

For 2001, the company said it expected revenue to grow 30%, or to about $904 million, below the First Call/Thomson Financial consensus estimate of $1.2 billion. The company's revenue estimate is dependent on chip demand picking up in the year's second half and PMC-Sierra returning to sequential quarterly growth of 8% to 12%.

Those are big "ifs." And PMC-Sierra said it had no "visibility" on the second quarter. For the uninitiated, that means the company doesn't know what orders or revenue will look like then.

The slide comes after a banner quarter. Earnings per share were up six cents from the third quarter and more than triple the fourth quarter of 1999, when earnings were 11 cents a share. Revenue came in at $232 million, above the consensus estimate of $229 million, according to First Call. The revenue figure is up from $198 million in the third quarter and from $92 million in the fourth quarter of 1999.

For the year, revenue was $695 million, up from $296 million in 1999.