Cyrix stock down on missed earnings
The chipmaker's stock falls 12 percent in early trading after announcing it will fail to meet second-quarter expectations.
The stock traded as low as 18-3/4, down from yesterday's close of 21-3/8.
The chip maker, which had expected to post a profit and match--or exceed--first-quarter revenues of $75 million, announced it expects to post a loss and declining revenues.
Wall Street had expected the company to report profits of 7 cents a share, according to First Call.
The announcement comes as the chip industry struggles to emerge from the slump that saw revenue growth decline 8.5 percent in 1996 compared to the previous year.
Cyrix officials blamed the shortfall on an industry-wide drop in demand for midrange processors. Cyrix is having trouble unloading its non-MMX 6x86 processors because they're surrounded on the low end and high end by MMX chips.
Pricing pressure from chip giant Intel (IN TC) has not helped.
"Intel's aggressive price action is putting pressure on third-tier suppliers like Cyrix," said C.B. Lee, an analyst with Hancock Institutional Equity Services in San Francisco.
He added Cyrix has to price its products 30 percent below Intel in order to compete.
But Cyrix vice president of corporate marketing Steve Tobak denied that Intel's price cuts were the source of his company's problems.
"What we're seeing is the cyclical nature of the industry," said Tobak. "We have a significant buying season in the second half of the year and a significant lull in the first half."
Tobak said his company would rebound with the help of its newly announced MediaGX processor, which is designed for the sub-$1,000 PC market. Cyrix is also shipping its high-end 6x86MX chip. The company expects to have shipped one million 6x86MX units by the end of the year.
But Cyrix still has to contend with its stockpile of leftover midrange chips. Tobak expected to move most of these processors in the third quarter and the remainder in the fourth quarter through price cuts and new marketing programs.