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Cypress expects blowout 1Q numbers but stock heads south

Cypress Semiconductor said Tuesday that its first-quarter sales and earnings will easily surpass analysts' estimates. However, a broad-based selloff in the chip sector, led by Motorola, pushed its shares down 6 1/2, or 12 percent, to 49 1/2.

This marks the second consecutive quarter that Cypress has preannounced better-than-expected earnings.

In the fourth quarter, Cypress (NYSE: CY) managed to beat upwardly revised estimates, earning $37.7 million, or 32 cents a share, on sales of $207.9 million.

On Tuesday, company officials said it expects to record sales of between $260 million to $264 million, including $13 million in sales from its newly acquired networking memory company, Galvantech Inc.

If their predictions are correct, Cypress will post sequential sales growth of around 25 percent and an improvement of about 70 percent from the year-ago quarter when it recorded sales of $151.6 million.

It also expects earnings of between 39 cents to 41 cents a share, well above the First Call consensus estimate of 33 cents a share.

"The first quarter of 2000 exceeded our expectations: We are shipping at a revenue rate of $1 billion for the first time in our history," said CEO T.J. Rodgers in a prepared release. "We are now six months ahead of Street estimates. Demand is strong in all business units, driven by robust growth in the communication segment."

Cypress will report its first-quarter earnings on April 18.

Despite the rosy outlook, Cypress and other chipmakers were suffering through a chip-sector selloff.

Motorola (NYSE: MOT) shares tumbled 25 1/2, or 17 percent, to 125 1/2 Tuesday despite beating Street estimates by a penny a share in its first quarter.

Investors were put off by the fact that company officials told analysts it expected second-quarter earnings of 67 cents a share, which would be 3 cents below analysts' forecast.

Among other leading chip stocks, Rambus Inc. (Nasdaq: RMBS) fell 14 7/16 to 248 9/16; Advanced Micro Devices Inc. (NYSE: AMD) slid 4 1/8 to 71 3/8 and Intel Corp. (Nasdaq: INTC) managed to gain 1 1/8 to 132 1/4.

Cypress shares hit a 52-week high of 57 1/4 earlier this month after bottoming out at 9 11/16 last April.

Eleven of the 13 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.