Goldman Sachs

analyst Nathaniel Cohn downgraded the communications-chip makers this morning, dropping

Applied Micro Circuits

(AMCC)

,

PMC-Sierra

(PMCS)

and

Vitesse Semiconductor

(VTSS)

to market outperform from buy. He said the environment will be challenging in the near term.

In a research report this morning, Cohn said the companies just don't have that much good news in the pipeline that would give investors a reason to buy the stocks.

"Many of the catalysts we have discussed since

Cisco

(CSCO) - Get Report

preannounced in April have come and gone and we are more likely to see adverse news flow during the next six weeks," Cohn wrote to investors. He said there are few catalysts to move the stock after the big

Supercomm

conference wraps up on June 7. It is a trade show where high-tech companies demonstrate new products and projects.

Valuations for the communications-chip makers remain high, the analyst said, meaning Applied Micro, PMC and Vitesse could be range-bound -- and volatile -- in the near future. Indeed, a quick check of their performance so far this 2001 shows wide price swings. Applied Micro has been as low as $11.25 this year and as high as $88.25. PMC has swung down to $18.66 and as high as $111.75. Vitesse has dropped to $15.12 and hit $77.25.

Along with the downgrade, the analyst also cut his earnings-per-share estimates on all three companies, dropping his new targets below the current consensus among Wall Street analysts. Applied Micro's 2002 estimate was cut to 5 cents from 10 cents, while its 2003 estimate was dropped to 25 cents from 31 cents. Analysts expect Applied Micro to make 10 cents a share in 2002, and 31 cents in 2003.

Cohn cut PMC's 2001 estimate to 6 cents from 10 cents and its 2002 estimate to 37 cents from 45 cents. According to earnings tracker

Thomson Financial/First Call

, analysts expect PMC to make 11 cents in 2001 and 56 cents in 2002. Vitesse's 2001 was cut to 40 cents from 42 cents, while its 2002 estimate was dropped to 27 cents from 32 cents. Analysts expect Vitesse to make 45 cents a share in 2001 and 44 cents a share in 2002.