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Vitesse breezes by forecast, sees darker skies ahead

The chipmaker surpasses analyst expectations but said slowing orders will hurt the company in the current quarter.

Vitesse Semiconductor surpassed analyst estimates in its fiscal first quarter Monday but lowered expectations for the current quarter.

The company said it raked in $47.6 million, or 25 cents a share, on sales of $165.1 million in the October to December quarter.

But slowing orders from major telecom customers, particularly Lucent Technologies, will result in only a 10 percent to 15 percent jump in sales in its current quarter, compared with its first quarter. That will be down from the 20 percent sequential increase it enjoyed in its first quarter.

A consensus of analysts had pegged the maker of chips for optical network equipment and storage networking to earn 24 cents a share on sales of $161.7 million, according to First Call.

Vitesse shares closed up $1.56 at $67.25 but then fell to $62 in after-hours trading, according to Island ECN.

The $165.1 million in sales represents an 85 percent improvement from the year-ago quarter, when it pocketed $20.4 million, or 11 cents a share, on sales of $89.3 million.

"Clearly, we're in a much slower macroeconomic climate," CEO Louis Tomasetta told analysts during a conference call Monday. "This will impact our sales in the second quarter. However, we don't see any major changes in demand in the optical market."

Communications sales in the quarter surged to $158.3 million, or 93 percent of total sales, up 21 percent from its fourth quarter and up 102 percent from the year-ago quarter.

Telecommunications sales rose to $95 million, up 19 percent from the $79.5 million it recorded in the prior quarter. Datacom sales, which include storage chips, rose 24 percent from the prior quarter to $58.8 million.

Lucent, which was its largest customer coming into the fiscal year, accounted for $14 million of sales in the quarter, down from $19.2 million in the previous quarter. Cisco Systems ordered more than $16 million worth of chips this quarter, up from $14 million in the previous quarter.

Gross profit margins checked in at 68.3 percent in the quarter, up 1 percent from its fourth quarter.

Last quarter, Vitesse hurdled analysts' estimates when it earned $40.3 million, or 21 cents a share, on sales of $138 million.