PMC-Sierra

(PMCS)

issued an early-morning warning, saying it would miss first-quarter financial targets because of weak demand and the need to eliminate its backlog during the quarter. The chipmaker said it would be handing out pink slips to 230 workers starting today.

PMC-Sierra, which is based in Campbell, Calif., said it expects first-quarter earnings of 2 cents to 3 cents a share, excluding amortization of intangibles and charges related to a workforce reduction. That's down significantly from earnings of 17 cents a share in the same period last year. Analysts are currently expecting the company to earn 12 cents in the quarter, according to earnings tracker

Thomson Financial/First Call

.

The company projects its will have $118 million to $120 million of revenue in the first quarter, compared with $102.8 million a year ago. Analysts on average, however, expected revenue to hit $159.71 million.

Despite the problems, PMC-Sierra said it will still be expanding its products. "Due to current market conditions, it is necessary that the Company reduce a portion of its operating expenses. However, given our reservoir of technologies, our strong balance sheet, and our continuing momentum with design win successes, we will be aggressively expanding our product portfolio for the metro, core, access and wireless segments of the communications semiconductor market in 2001," PMC-Sierra said in a prepared statement. It currently employs 1,740 people worldwide.

The company is only the latest in a long list to caution about lower earnings. The semiconductor sector had a rally late last week, but by and large it has been hit by a blast of earnings falloffs.

Micron

(MU) - Get Report

will report second-quarter earnings later today. It is expected to post an earnings shortfall of 3 cents a share, compared to a profit of 29 cents a share a year ago.

Shares of PMC-Sierra closed Friday at $33.94 on the

Nasdaq, sharply off its 52-week high of $246.25.