Vitesse Matches Targets, Guides Revenue Higher

Vitesse Semiconductor

(VTSS)

, a maker of integrated circuits for communications applications, swung to a loss in the fiscal second quarter as end-market demand for its products remained weak.

Vitesse reported a loss of $21.5 million, or 11 cents a share, excluding amortization, deferred compensation and various nonrecurring charges in the quarter. On the same basis, the company earned $18.8 million, or 10 cents a share, in the same period a year ago. Including items, the company lost $44.4 million, or 22 cents a share, in the latest quarter.

The results were in line with analysts' expectations, according to Thomson Financial/First Call. Sales came in at $42.1 million, down 65% from a year ago but up 8% from the first quarter.

Wall Street was expecting a top line of $41.2 million, after Vitesse posted revenue of $39.2 million in the first quarter. A year ago, the company started to see a major slowdown in sales as the entire telecommunications sector suffered from overcapacity.

"In the second quarter of fiscal 2002, we saw a modest increase in revenue, primarily driven by demand in the metro market where many of our products are now moving into production," Vitesse's CEO, Lou Tomasetta, said in a press release. "While this represents our second consecutive quarter of top-line growth, we continue to be remain cautious about end-system demand for the remainder of 2002."

Ahead of its earnings release, Vitesse closed up 90 cents, or 11.1%, at $9.01, after upbeat guidance from

Texas Instruments

(TXN) - Get Report

and

Novellus

(NVLS)

raised hopes for a recovery.

On a conference call following the earnings release, the company's executives said they expect financial results in the third quarter to be even with or better than the second quarter. Vitesse is projecting revenue of $42 million to $46 million and a loss, before items, of 9 cents to 11 cents a share. Analysts, on average, expect revenue of $40.9 million and a loss of 9 cents.