SAN FRANCISCO -- Another day, another crashing chip stock. Investors cut Trident Microsystems' ( TRID) stock value nearly in half Friday, after a weak financial report a day earlier that triggered at least three downgrades from Wall Street analysts. The Santa Clara, Calif.-based company said it was facing increasing competition in the market providing chips for low-cost flat-panel televisions. Trident forecast sales in the current quarter between $70 million and $72 million, sharply below the $91.6 million expected by analysts. Jefferies analyst Adam Benjamin said that the company's outlook suggests EPS in the current quarter of 23 cents -- below the 33 cents expected by analysts polled by Thomson Financial. Shares of Trident fell 41.9%, or $5.12, to $7.08 in midday trading Friday. "We expect the company to lose share in the TV market and face increasing price pressure as the market bifurcates," wrote Benjamin in a note to investors downgrading Trident to a hold rating. "Trident's bet on the high-end poorly positions it to address the faster growing low-end TV market which requires low-cost and highly integrated system-on-a-chips," wrote Benjamin. Jefferies makes a market in Trident shares. Deutsche Bank and Oppenheimer also downgraded Trident on Friday to hold and neutral, respectively.
Trident is the latest casualty in a
brutal earnings season for chipmakers that has erased billions of dollars in shareholder value. Chipmakers Altera ( ALTR), Broadcom ( BRCM) and FormFactor ( FORM) have all seen their shares plunge more than 15% or more after reporting earnings. In the three months that ended Sept. 30, Trident reported revenue of $88.1 million, up 23% year over year, with a net income of $10 million, or 16 cents a share. Excluding stock compensation expenses, as well as amortization charges and fees related to the company's review of past accounting practices, Trident said it earned 38 cents a share. Analysts were expecting $90.2 million in revenue, with EPS of 32 cents, excluding stock expenses.