Xilinx warns of disappointing sales

Programmable logic device maker Xilinx warned Monday that its fourth-quarter sales will fall short of analysts' estimates as new orders continued to deteriorate in February.

Company executives said February resales were down compared to November as customers continue to defer orders or cancel existing orders in response to the slowing economy and inventory saturation.

The company now expects fourth-quarter sales to fall at least 15 percent from the $450.1 million it recorded in the third quarter.

First Call consensus pegged Xilinx (Nasdaq: XLNX) for a profit of 27 cents a share on sales of $481.2 million in the fourth quarter.

In a prepared release, Xilinx said North America resales for the first two months of the quarter were down more than 20 percent from the third quarter while international resales were flat with the prior quarter.

The company did not provide any additional guidance regarding earnings for the quarter or the rest of fiscal 2001.

Last week, fellow programmable logic device (PLD) maker Altera (Nasdaq: ALTR) issued a similar warning, telling the Street to expect a 20-percent decline in sales from the $368 million it recorded in the prior quarter.

Following the warning, Bear Stearns analyst Charles Boucher predicted that other PLD companies would be following suit in the days and weeks to follow.

"Excess demand for semiconductors in the communications markets during the last two years was due not only to the usual double ordering associated with tight supply conditions, but also to over-investment in the communications service and hardware markets, effectively creating another layer of excess demand," he wrote in a research note. "The rapid deterioration in backlogs and new orders is the unwinding of this excess."

Xilinx shares closed up 75 cents to $43.25 ahead of the warning before falling to $42.94 in after-hours trading.

Last quarter, it missed analysts' reduced estimates when it posted a profit of 31 cents a share on sales of $450.1 million.

Its shares peaked at $98.31 in June before falling to a 52-week low of $35.25 in February.

Seventeen of the 21 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.