Virata crumbles on 2Q results

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Virata Corp. (Nasdaq: VRTA) crumbled 41 percent Thursday after reporting booming revenues, a net loss of 1.56 a share after hefty one-time charges, and a profit of 13 cents a share on a diluted basis in its second quarter.

Shares in the semiconductor supplier for broadband communications were down 14.13 to 18.75, following Wednesday's after the bell earnings report. The company had said it expected second quarter revenues for the period ending Oct. 1 to be about $41.5 million, up 50 percent over the prior quarter's $27.7 million.

Thursday, UBS Warburg downgraded the stock from "strong buy" to "buy." Other analysts were still bullish on the stock; analyst Shekhar Wadekar at Dain Rauscher Wessels, who has a 6-month target price of $71.00 on the stock, reiterated his "strong buy" rating. Kaufman Bros. analyst Alvin Kressler, who has a target price of $115 a share, also reiterated a "strong buy."

Revenues for the second quarter were $42.2 million, an increase of 1,301 percent over net revenues for the second fiscal quarter of 2000; and an increase of 52.4 percent over revenues of $27.7 million for the first fiscal quarter 2001.

Virata reported adjusted net income of $8.5 million, or 13 cents per adjusted diluted share -- on an as adjusted basis, excluding charges. That compares with $4.1 million in adjusted net loss for the same quarter one year ago, or a loss of 15 cents a share.

The company reported a net loss per diluted share of $1.56 for the second fiscal quarter of 2001, compared to a net loss per diluted share of 26 cents a share for the prior quarter and $1.14 for the same quarter one year ago. Charges include a $79.9 million charge for research and development related to the acquisition accounting for Excess Bandwidth and Agranat Systems, $16.6 million of amortization of intangible assets, $0.6 million of stock compensation expense and a $1.7 million charge for National Insurance Contribution on stock options.

At October 1, 2000, Virata had $527.9 million in cash and short-term investments and working capital of $524.6 million, the company said.