Updated from 8:23 a.m. EDTPMC-Sierra ( PMCS) took a hit Friday as investors looked past a solid earnings report and focused on possibly soft third-quarter revenue guidance. Management talked up a telecom market recovery and increasing broadband buildout after Thursday night's report. But the Santa Clara, Calif.-based communications chipmaker indicated that third-quarter revenue could fall short of forecasts. Despite an upgrade from Wedbush Morgan to buy from hold, the stock was recently down $1.13, or 12.6%, to $10.62. PMC-Sierra management said in a postclose conference call that the company expects third-quarter revenue to range from $86 million to $92 million, or flat to up 7.4% sequentially, with operating expenses flat sequentially. The company did not offer specific earnings guidance. The midpoint of those revenue targets fell short of the $91.3 million consensus estimate gathered by Thomson First Call. Analysts also were expecting third-quarter earnings at 8 cents a share. Under generally accepted accounting principles, PMC-Sierra reported net income of $15.4 million, or 8 cents a share, in the quarter, which ended June 27. That reversed a net loss of $9.2 million, or 5 cents a share, in the same period a year earlier. Excluding charges, the company said non-GAAP income totaled $14.9 million, or 8 cents a share, reversing a net loss of $3.9 million, or 2 cents a share, in the year-ago period. Revenue reached $85.7 million, a 42% increase from $60.4 million a year earlier and a 9% jump from $78.7 million in the first quarter. Wall Street analysts expected PMC-Sierra to earn 7 cents a share on $86 million in revenue in the second quarter. On June 4, PMC-Sierra said it expected revenue to meet or exceed the high end of its previously issued sales range, for $83 million to $85 million. The initial guidance implied sequential growth of 8% to 10%.