Xilinx ( XLNX - Get Report) reported $228.1 million in revenue and 3 cents a share in profits for the third quarter of its fiscal year 2002 after the market's close Thursday. That's an incredible 49% year-over-year drop from the third quarter of 2001's $450 million in revenue.

Excluding special items, Xilinx wrung out a 7-cents-a-share pro forma profit, cruising by Wall Street expectations that the programmable logic device maker's revenues would fall 5% sequentially to $212.8 million, according to Multex.com, for a 4 cents a share pro forma profit.

Xilinx had notched $225 million in revenue in the previous quarter, with a nickel a share pro forma profit -- but that factored out an unpleasant $191 million writedown of its investment in manufacturing partner UMC ( UMC - Get Report) that left the chipmaker with a 53-cents-a-share shortfall based on generally accepted accounting principles.

Xilinx was plagued along with its competitors in calendar 2001 by a tremendous drop in demand for components in the telecom markets, and by general economic uncertainty as U.S. economic troubles effected worldwide buying.

From the fourth quarter of fiscal 2001 to the first quarter of 2002, the chipmaker's sales dived 29%. The second quarter of 2002 wasn't kind to Xilinx either, as overall revenue dropped another 22%, and European sales plummeted 48% sequentially. European sales went from comprising 28% of Xilinx's business to 19% in one quarter, leaving the Asia/Pacific region to pick up the slack.

Finally, in the third quarter of 2002, Xilinx's fall seemed to slow. European sales worked back up slightly to 20% of total sales.

Earlier in the week, Xilinx announced a new family of programmable chips, CoolRunner-II, to branch out into the burgeoning market for smaller connected devices. Xilinx expects to entice customers in the digital camera, PDA, Internet games and smart phone market, diversifying its customer base.